TIDMWEIR
RNS Number : 4205R
Weir Group PLC
01 March 2023
Record orders, strong execution and good strategic progress
Record demand for Weir spares and equipment
-- FY AM orders(1) +17%; capitalising on installed base growth and mining production trends
-- FY OE orders(1) +3%; delivering Weir's sustainable and brownfield solutions
-- Q4 mining markets positive, orders(1) +8% against a very strong comparative
Strong execution: Medium-term targets on track
-- FY revenues(1) +21%; outperforming our markets
-- FY adjusted operating profit(1,2,3) of GBP395m, +25%
-- Operating margin(2,3) of 16%; +70bps
-- Free operating cash conversion of 87%
-- Cumulative 17% reduction in absolute scope 1&2 emissions vs. 2019 baseline(2,6)
Increasing balance sheet strength and returns
-- Lowered net debt to EBITDA to 1.5x; new GBP300m debt facility agreed in January 2023
-- Return on capital employed(2) of 15.2%, +320bps
-- Full year dividend of 32.8p; +38%
Expecting another year of growth in 2023
-- Record opening order book and positive mining markets
-- Growth in constant currency revenue, profit and operating margins
-- On track to deliver target of 17% operating margin in 2023
-- Free operating cash conversion of 80% to 90%
As Constant
reported currency(1)
2022 2021 +/- +/-
=============================== ================ ================ =============== ===============
Continuing Operations(2)
=============================== ================ ================ =============== ===============
Orders(1) GBP2,644m GBP2,323m n/a +14%
=============================== ================ ================ =============== ===============
Revenue GBP2,472m GBP1,934m +28% +21%
=============================== ================ ================ =============== ===============
Adjusted operating profit(3) GBP395m GBP296m +33% +25%
=============================== ================ ================ =============== ===============
Adjusted operating margin(3) 16.0% 15.3% +70bps +60bps
=============================== ================ ================ =============== ===============
Adjusted profit before
tax(3) GBP348m GBP249m +40% n/a
=============================== ================ ================ =============== ===============
Statutory profit before
tax GBP260m GBP209m +24% n/a
=============================== ================ ================ =============== ===============
Adjusted earnings per share(3) 98.4p 71.3p +38% n/a
=============================== ================ ================ =============== ===============
Return on capital employed 15.2% 12.0% +320bps n/a
=============================== ================ ================ =============== ===============
Total Group
=============================== ================ ================ =============== ===============
Statutory profit after
tax GBP214m GBP259m -17% n/a
=============================== ================ ================ =============== ===============
Statutory earnings per
share 82.5p 99.7p -17% n/a
Free operating cash conversion 87% 63% n/a n/a
=============================== ================ ================ =============== ===============
Dividend per share 32.8p 23.8p +38% n/a
=============================== ================ ================ =============== ===============
Net debt(4) GBP797m GBP773m -GBP24m n/a
=============================== ================ ================ =============== ===============
(See footnotes on page 5)
Jon Stanton, Chief Executive Officer said:
"The value creation opportunity for Weir is compelling. The
mining industry is playing a crucial role in meeting the twin
demands for decarbonisation and economic growth, resulting in
multi-decade demand growth for critical metals. Weir is the focused
mining technology leader that is well placed to capitalise. Deeply
embedded in our customer operations and offering unique engineering
expertise and innovation, our solutions are delivering excellent
outcomes for all stakeholders.
This is reflected in the proven performance of our mining
businesses through the cycle, and was further evidenced in 2022. We
are making mining smarter, more efficient and sustainable. We are
growing faster than our markets, strengthening margins and cash and
reducing our CO(2) footprint. We are underpinning our continued
progress through our commitment to our future technology roadmap
with increased investment in R&D, and a sharper focus on
execution through Performance Excellence.
So our future is exciting. Reflecting high levels of confidence
in this strategy to deliver long-term sustainable profitable
growth, the Board has approved a final dividend of 19.3p, an
increase of 57% on 2021."
A webcast of the management presentation will begin at 08:00
(GMT) on 1 March 2023 at www.investors.weir . A recording of the
webcast will also be available at www.investors.weir .
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
2022 was a landmark year for Weir. We demonstrated the benefits
of focus: winning share in favourable markets, executing strongly
and taking significant steps towards achieving our medium-term
targets. We outgrew our markets and delivered significant
year-on-year growth in revenue, profit and cash generation.
We also made excellent strategic progress. Highlights included
the launch of our redefined mill circuit, our production
partnership model in ESCO and the next generation of our
proprietary digital platform, Synertrex(R) . Our safety performance
improved with a 13% like-for-like reduction in the rate of total
incidents(5) (TIR), while in July, we announced our Performance
Excellence programme, which will drive further operational
efficiency across the Group. Our recent acquisitions, Motion
Metrics and Carriere Industrial Supply (CIS), both performed very
well and ahead of initial expectations.
Our strong performance across all metrics reflects the
outstanding work of Weir colleagues across the globe, and I would
like to take this opportunity to thank them. Collectively, they
dealt with the consequences of the horrific Russian invasion of
Ukraine, widespread disruption to global supply chains, inflation
at the highest level in a generation and the lingering effects of
both the Covid-19 pandemic and 2021 cyber incident. To have
delivered so strongly in 2022 with all of this going on is a
testament to their commitment, passion and resilience. I am
extremely proud of the team.
Looking ahead, I am hugely excited about the future of Weir and
our commitment to deliver excellent outcomes for all stakeholders.
In 2022 we set out a refreshed equity case centred on our leading
position in highly attractive markets and our unique capabilities
to make mining smart, efficient and sustainable. This overall
positioning and focus gives us confidence that we can outgrow our
markets, expand our margins and convert our earnings to cash, while
remaining resilient and doing the right thing for our people and
the planet, all of which was demonstrated in 2022.
Growth: Ore production trends drive strong demand for Weir
solutions
Throughout the year, conditions in mining markets were highly
favourable. Across most key commodities, market prices were
significantly above miners' cost to produce and end market demand
was high. This was particularly the case for energy transition
metals, such as copper, as physical inventory levels tightened
through the year.
With large greenfield expansion projects slow to convert, miners
met demand by accelerating production from existing assets and by
developing harder and more complex ore deposits. This, coupled with
a growing installed base and the effects of declining ore grades,
drove record demand for our aftermarket spares and expendables. In
OE, we won market share as miners ordered Weir solutions to
debottleneck and improve the efficiency of existing assets. In
particular, we saw strong demand for our industry-leading Warman(R)
mill circuit pumps that have significant productivity and
sustainability benefits relative to competitor solutions.
Demand was strong in all regions, with North America supported
by particularly high levels of activity in the Canadian oil sands
and Asia Pacific seeing a strong recovery in Australia. Our growing
geographical footprint allowed us to capitalise on new demand in
ASEAN countries as miners made strategic investments in the region,
such as in nickel expansion projects in Indonesia. Our new service
centre in Kazakhstan enabled us to support growing demand from
customers in Central Asia, including a series of recently developed
copper projects.
In infrastructure markets, demand was stable at high levels in
the first half of the year. Demand was lower in Europe during the
second half as activity levels in end markets fell. Demand also
softened, to a lesser extent, in the US during the fourth
quarter.
On a constant currency basis, the Group delivered strong
year-on-year order growth of 14%.
Demand for AM was particularly strong and constant currency
orders grew 17% year-on-year, reaching record levels.
In OE, constant currency orders were up 3% year-on-year. Orders
in the prior year included the GBP36m Ferrexpo HPGR and GBP32m
Indonesia electric pumps orders, and excluding these large orders
from the prior year comparator, constant currency orders were up
16%.
Revenue was 21% higher on a constant currency basis as we
converted our order book.
Margins and resilience: Strong execution delivers operating
margin(3) expansion
In 2022 we were successful in managing a complex operating
environment, where rising levels of inflation were a mainstay and
bottlenecks in global logistics channels were present for much of
the year. Our market leading positions enabled us to increase
prices and pass through all input cost inflation, while our
vertically integrated regional manufacturing model gave us
protection from supply chain challenges, and ensured our customers
had continued access to our equipment and spares to keep mines
running.
Adjusted operating profit(2,3) was 25% higher than in the prior
year on a constant currency basis and operating margins(2,3) were
16.0%, up 70bps on an as reported basis. This expansion reflects
movement in Minerals revenue mix towards AM, underlying operational
efficiency and the mitigation of inflationary pressures, and
represents good progress towards our 2023 target of 17% operating
margin.
In July 2022, we launched our Performance Excellence programme
outlining our ambition to grow margins above 17% beyond 2023. The
programme will drive further operational efficiency across the
Group and deliver GBP30m of annualised run-rate savings in 2025,
with an expected one-off cost of up to GBP45m phased across the
three years. Plans to deliver the programme remain on track, and as
expected, we will see the early benefits in 2023.
Returns: Free operating cash conversion target achieved
Early in 2022 we introduced a new free operating cash conversion
metric, which measures free operating cash flow relative to
operating profit(3) . Our target for 2022 was to achieve between
80% and 90%.
Our focus on execution and working capital efficiency delivered
significant cash generation, particularly during the final quarter
of the year, resulting in full year free operating cash conversion
of 87%.
Our strong cash conversion meant net debt to EBITDA fell to
within our target range, being 1.5x at the end of December (2021:
1.9x). While, year-on-year, return on capital employed improved by
320bps to 15.2%.
In January 2023 we put in place a new GBP300m medium-term loan
which, combined with our US$800m sustainability linked bond and
US$800m multi-currency revolving credit facility, ensures the Group
retains substantial levels of liquidity at highly favourable
interest rates. This was followed, in February 2023, by the
repayment of the final US$200m tranche of the Group's US Private
Placement debt.
Reflecting high levels of confidence in our strategy and future
prospects, the Board has today announced a final dividend of 19.3
pence per share. This equates to a total full year dividend of 32.8
pence per share, which is 33% of adjusted EPS for the period, in
line with our capital allocation policy.
Safety and sustainability: SBTi aligned absolute carbon
reduction targets
Sustainability is core to Weir's purpose and is a critical
priority for the mining industry. In 2022, we committed to more
ambitious SBTi aligned carbon reduction targets. These included an
update to absolute, rather than intensity linked, reduction targets
for scope 1&2 emissions, and also the introduction of a scope 3
emissions reduction target. Our scope 3 emissions include our
customers' scope 1&2 emissions, and Weir solutions and
technology are playing a key role in helping our customers reduce
their emissions and deliver against their own carbon reduction
targets. Indeed, our top ten customers have all set targets to
reduce scope 1&2 emissions by between 30% and 50% by 2030.
During the year, we delivered a 3% absolute year-on-year
reduction in our scope 1&2 emissions, in the context of revenue
growth of over 20%. We also increased the amount of electricity we
source from renewables to 22% as we installed new solar panel
arrays at our sites in Chile, Malaysia and South Africa. This means
we have now delivered a cumulative 17% reduction in our absolute
scope 1&2 emissions, relative to our 2019 baseline.
We also started work to quantify scope 4, avoided emissions, for
key products in our portfolio. Over time, we anticipate using the
outputs of this work to enhance our overall customer value
proposition, while creating the potential for Weir to recognise
green revenue.
With respect to safety, our TIR(5) for the year was 0.41,
representing a 9% improvement on the prior year of 0.45. Excluding
the impact from acquired businesses, 2022 TIR(5) reduced by 13% to
0.39. During the year we also enhanced our strategy on safety with
the launch of our new Zero Harm Behaviours framework, which will
drive further improvements as we seek to eliminate harm in our
operations.
Compelling value creation opportunity for all stakeholders
The long-term value creation opportunity for the Group is
compelling. Mining has a critical role to play in decarbonisation
as, over the coming decades, the world needs significantly more
metals to transition to Net Zero, and meet increasing demands
driven by continued GDP growth. However, to unlock the supply
needed, the mining industry must adopt new technologies and become
more sustainable.
Weir's unique world class engineering expertise, coupled with
our clear strategic framework focused on People, Customer,
Technology and Performance means we are well placed to capitalise
on this opportunity.
Critical to this is our technology roadmap and R&D
framework. In 2022, we reiterated our commitment to increase our
investment in R&D to 2% of revenue, while also increasing the
amount of spend allocated to addressing our customers' biggest
sustainability challenges. These can be summarised in the five key
themes of: Move less rock; Use less energy; Use water wisely;
Create less waste; and Boost with digital.
Our technology roadmap aligns to these themes, and in 2022, we
launched several new solutions. This included our redefined mill
circuit, which is underpinned by our new technology partnerships
with STM for stirred mills and Eriez for coarse particle flotation.
These technologies, when packaged into an integrated solution with
our energy saving High Pressure Grinding Rolls (HPGRs) and our
industry leading cyclones and pumps, significantly reduce ore
reprocessing, improving mine productivity while reducing energy and
water consumption.
We successfully rolled out Motion Metrics(TM) products through
the ESCO sales network and integrated the technology with ESCO
hardware to create a packaged productivity solution. This underpins
our production partnership model, and has enabled us to explore new
ways of working with our customers where our revenue is linked to
the productivity benefits we deliver.
Going forward, our ambition is to capitalise on our footprint in
both the mining pit and processing plant by connecting and
integrating our solutions across the full value chain to deliver
compounding benefits.
Specifically, in our mine of the future, Motion Metrics(TM)
vision technology will ensure only the right rock is moved from the
pit to the plant to be processed, and data captured on critical
rock characteristics will enable processing to be optimised. Our
processing technologies will reduce energy consumption and ensure
that water is used wisely, and by having only the right ore
entering the process, efforts will be expended on processing higher
grade material, rather than waste. For the waste that is produced,
our Terraflowing(TM) solutions will balance water recovery with
tailings stability and energy consumption. Furthermore, our
proprietary digital systems will capture data across the whole
value chain, enabling pre-emption of potential issues and operating
conditions to be optimised.
This will further strengthen our position as a critical supplier
to the mining industry as it pursues its sustainability ambitions.
The combination of this market opportunity, coupled with our unique
capabilities, underpins our commitment to deliver excellent
outcomes for all our stakeholders.
Outlook
We begin 2023 with a record order book and positive conditions
in mining markets, where high levels of activity, coupled with
miners' focus on sustainable operations, are driving demand for our
AM spares and brownfield OE solutions.
In 2023, we therefore expect to deliver growth in constant
currency revenue, profit and operating margin. We are on track to
deliver our target of 17% operating margin in 2023, supported by
operational efficiencies and early benefits from Performance
Excellence, and expect free operating cash conversion of between
80% and 90%.
Further out, the long-term fundamentals for mining and our
business are highly attractive, underpinned by decarbonisation, GDP
growth and the transition to sustainable mining. We have a clear
strategy to grow ahead of our markets, with specific growth
initiatives underpinning our ambition to deliver through-cycle
mid-to-high single digit percentage revenue growth. Beyond 2023,
Performance Excellence will support margin expansion above 17% and
we expect free operating cash conversion to increase to between 90%
and 100%.
Board changes
After completing her full nine-year term, Mary Jo Jacobi will be
stepping down from the Board at the AGM and Ebbie Haan has decided
not to seek re-election.
We are Weir strategic framework: 2022 performance
Each year the Group sets strategic and ESG measures aligned to
the 'We are Weir' framework of People, Customer, Technology and
Performance. The table below summarises our 2022 performance and
rating against each of these measures, with full details outlined
in our 2022 Annual Report.
Strategic 2022 Measures 2022 Performance and
initiatives rating
People Deliver on Zero G
Harm for our * Retain our talent * Voluntary attrition
people
and the
environment
Accelerate our
purpose-driven
culture and lead
in inclusion,
diversity
and equity
Create talent and
capabilities for
the future
----------------- ========================================================= ============================================================
G
* Build our digital capability * Growth in core digital team
G
* Senior Leaders trained on Weir Digital Vision
----------------- ========================================================= ============================================================
G
* Maintain top quartile engagement scores * Engagement score of 8.5; top quartile of benchmark
========================================================= ============================================================
G
* Improve our Safety Total Incident Rate (TIR)* * On a like-for-like basis, TIR of 0.39 (2021: 0.45)
========================================================= ============================================================
G
* Improve our gender diversity* * % of female employees improved by 0.7%
----------------- --------------------------------------------------------- ------------------------------------------------------------
Customer Outgrow our G
markets * Execute our top 3 strategic growth initiatives in * Minerals executed its strategy on Integrated
through each division Solutions, spares and OE market share gains
voice-of-customer
led initiatives G
Solve our
customers' * ESCO executed its strategy on mining G.E.T.,
biggest smart, infrastructure G.E.T. and mining buckets
efficient
and sustainable
challenges
Show leadership
in our
industries'
pathway to Net
Zero
----------------- ========================================================= ============================================================
G
* Establish new strategic alliances * CIS acquisition; and new STM & Eriez partnerships
----------------- ========================================================= ============================================================
G
* Develop our scope 4 value proposition* * Phase 1 product evaluations completed
----------------- --------------------------------------------------------- ------------------------------------------------------------
Technology Invest in G
innovating * Secure market acceptance of our top 3 horizon 1 * Innovations launched; market acceptance ongoing
transformational innovations in each division
solutions
Digitally enable
everything we do
Create new
business
and business
models
from data and
insights
----------------- ========================================================= ============================================================
G
* Digitise our current business model * Minerals: Grew Synertrex installed base
G
* ESCO: CA$26m sales from Motion Metrics
----------------- ========================================================= ============================================================
G
* Create and deploy Future Back Strategy * Minimum viable proposition for priority opportunities
developed and mobilised
========================================================= ============================================================
G
* Build pipeline and commercialise sustainability * Priority projects underway or completed
focused technologies and solutions*
========================================================= ============================================================
G
* Progress our priority acceleration R&D projects* * Ore characterisation: equipment on customer site for
commencement of trial
G
* Additive manufacturing: technologies successfully
integrated
----------------- --------------------------------------------------------- ------------------------------------------------------------
Performance Drive clear, lean G
and agile * Improve our lean scores * Improved Level 2 & 3 scores
operations
and supply chain
Deliver high
quality,
efficient
back-office
functions
Expand margins
and
deliver strong
cash
conversion
----------- ----------------- ========================================================= ============================================================
G
* Grow the percentage of Group revenue covered by * 80% Group revenue covered by Finance shared services
Finance shared services
----------- ----------------- ========================================================= ============================================================
G
* Reduce scope 1&2 CO(2) e vs 2019 base aligned with * 17% absolute CO(2) e reduction achieved and verified
SBTi*
========================================================= ============================================================
G
* Evaluate SBTi scope 3 targets* * Scope target in process of being validated by SBTi
and embedded in CO(2) e strategy
----------- ----------------- --------------------------------------------------------- ------------------------------------------------------------
*ESG measures
Notes:
The Group Financial Highlights and Divisional Financial Reviews
include a mixture of GAAP measures and those which have been
derived from our reported results in order to provide a useful
basis for measuring our operational performance. Adjusted results
are for continuing operations before adjusting items as presented
in the Consolidated Income Statement. Details of other alternative
performance measures are provided in note 2 of the Audited Results
contained in this press release.
1. 2021 restated at 2022 average exchange rates.
2. Continuing operations excludes the Oil & Gas Division,
which was sold to Caterpillar Inc. in February 2021 and the
Saudi-Arabian joint venture, which was sold to Olayan Financing
Company in June 2021.
3. Profit figures before adjusting items. Continuing operations
statutory operating profit was GBP308m (2021: GBP257m). Total
operations operating cash flow (cash generated from operations)
excludes additional pension contributions, exceptional and other
adjusting cash items, and income tax paid. Total operations net
cash generated from operating activities was GBP321m (2021:
GBP156m).
4. 2021 has been restated to reflect the finalisation of the
Motion Metrics opening balance sheet. Details of the restatement
are provided in note 1 of the Audited Results contained in this
press release.
5. Total incident rate is an industry standard indicator that
measures lost time and medical treatment injuries per 200,000 hours
worked.
6. Market-based absolute CO(2) emissions. 2019 is the baseline
year for our SBTi-aligned Scope 1&2 target of 30% reduction in
absolute emissions by 2030.
DIVISIONAL REVIEW
Minerals
Minerals is a global leader in products and integrated solutions
for smart, efficient and sustainable processing in mining and
infrastructure markets.
2022 Summary
-- FY: AM orders(1) +18%; demand driven by mining production
trends and growth in installed base
-- FY: OE orders(1) +2%; demand driven by sustainable and brownfield solutions
-- Strong execution: revenue(1) +20%; operating profit(1,2) +24%
2022 Operating Review
The Division benefited from high levels of mining activity and
growth in its installed base, which drove strong demand for spares
across all product categories, culminating in record annual AM
orders. In OE, customers ordered solutions to debottleneck and
improve the efficiency of existing assets, and in particular, we
saw strong demand for our industry-leading Warman(R) slurry
pumps.
Our focus on execution delivered record levels of divisional
revenue and operating profit. Operating momentum built through the
year, resulting in strong revenue growth and operating margin
expansion in the second half of the year as we converted our
growing order book.
People
Safety performance remained a priority for the Division, and
this is reflected in a 25% year-on-year reduction in total incident
rate (TIR) to 0.27 (2021: 0.36). This performance positions the
Division as one of the safest organisations in its sector, and is
particularly pleasing in the context of strong revenue growth and
increased levels of activity in our facilities.
People development was also in focus, with over 200 customer
facing colleagues completing our proprietary 'Mill Circuit
University' training programme, while in total around 10,000
learning and development courses were completed by Minerals
colleagues during 2022.
Customers
During the year, the Division made good progress in its
geographical expansion initiative, particularly in Central and
South East Asia. Notable progress included expansion of our
installed base across multiple projects in high-grade nickel
applications in Indonesia, with GBP33m of OE orders received
through the year for packages of GEHO positive displacement
pumps.
Across our core product lines customers continued to recognise
the benefits of our leading technology and global service network.
This manifested in market share gains across the mill circuit, as
the Division converted over 75% of its trials against competitor
equipment. Furthermore, good progress was made in delivering our
comminution strategy, including our first sale of a pebble crushing
plant to a large Tier 1 copper mine in South America.
Technology
Technology highlights in the year included new partnership
agreements with Eriez, for course particle flotation technology,
and STM, for tower mills. These technologies, combined with Weir's
sustainable solutions, form part of our redefined mill circuit that
has significant energy and efficiency benefits relative to
traditional technologies.
In Q4, the Division also launched the next generation of its
proprietary Synertrex(R) platform. The system provides data-driven
insights on equipment performance, enabling early identification of
issues and optimised maintenance planning, thereby improving
efficiency and mine productivity.
Performance
The Division continued to drive operational efficiency,
supported by investments in both systems and capacity. Significant
facility investments included the opening of a new facility in
Bangalore, which will drive efficiencies across our operations in
India, and also a new rubber mixing facility in Malaysia.
The roll-out of SAP also progressed well, with operations in
India successfully migrating in Q3, meaning around 85% of the
Division now operates the system. The final stages of the roll-out
are scheduled for 2023, with the migration of our Middle East and
Africa businesses scheduled for the first half of the year.
2022 Financial Review
Constant currency GBPm H1(1) H2 2022 2021(1) Growth(1)
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Orders OE 265 296 561 547 2%
Orders AM 687 689 1,376 1,170 18%
Orders Total 952 985 1,937 1,717 13%
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Revenue OE 200 258 458 425 8%
Revenue AM 597 725 1,322 1,057 25%
Revenue Total 797 983 1,780 1,482 20%
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Adjusted operating profit(2) 138 186 324 261 24%
Adjusted operating margin(2) 17.3% 18.9% 18.2% 17.6% 60bps
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Operating cash flow(2) 106 280 386 227 70%
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Book-to-bill 1.19 1.00 1.09 1.16
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
1. 2021 and 2022 H1 restated at 2022 average exchange rates
except for operating cash flow.
2. Profit figures before adjusting items. Operating cash flow
(cash generated from operations) excludes additional pension
contributions, exceptional and other adjusting cash items, and
income tax paid. Refer to note 2 of the Audited Results contained
in this press release for further details of alternative
performance measures.
Orders increased by 13% on a constant currency basis to
GBP1,937m (2021: GBP1,717m) with a book-to-bill of 1.09 reflecting
strong order growth and a focus on execution. OE orders increased
2% year-on-year, with demand predominantly driven by brownfield
solutions to debottleneck and improve the efficiency of existing
assets, as miners accelerated ore production and large projects
remained slow to convert. Through the year, we saw benefits from
our geographical expansion strategy, with our increased presence in
Central and South East Asia driving strong growth as we supplied
equipment to copper and nickel mines in the region. AM orders were
up 18% year-on-year as prices of most key commodities remained well
above cost of production, incentivising miners to increase activity
levels and develop more complex and lower grade ore bodies. Growth
also reflects year-on-year price increases. AM orders represented
71% of total orders (2021: 68%). In total, mining end markets
accounted for 75% of total orders (2021: 77%).
Revenue was 20% higher on a constant currency basis at GBP1,780m
(2021: GBP1,482m) as order activity remained strong and the
Division's focus on execution converted orders to revenue. Revenue
grew through the period, with H2 revenue 23% higher on a sequential
basis. Product mix moved slightly towards AM, which accounted for
74% of full year revenue (2021: 71%).
Adjusted operating profit increased 24% on a constant currency
basis to GBP324m (2021: GBP261m) as the Division benefited from
increased volumes, favourable mix and strong operational execution.
Costs in the year included an adverse transactional FX impact of
GBP9m, while discretionary spend, such as travel, returned to
normal levels following lower spend during the Covid-19 pandemic.
Prior year costs also included under-recoveries due to the cyber
incident in Q3 and a one-off gain from the sale of a property in
China.
Adjusted operating margin on a constant currency basis was 18.2%
(2021: 17.6%), with the +60bps improvement driven by favourable
mix, operating efficiency and the non-repeat of under-recoveries
from the cyber incident in the prior year. Benefits are partially
offset by the impact of adverse transactional FX and the
normalisation of discretionary spend.
Operating cash flow(2) increased by 70% to GBP386m (2021:
GBP227m) reflecting growth in operating profit and a reduced
working capital outflow of GBP18m (2021: outflow of GBP89m).
Working capital movements comprised inventory build to support the
growing order book and a reduction in receivables as revenue in H2
was more evenly loaded relative to the prior year.
ESCO
ESCO is a global leader in Ground Engaging Tools (G.E.T.),
attachments, and artificial intelligence and machine vision
technologies that optimise productivity for customers in global
mining and infrastructure markets.
2022 Summary
-- FY: Orders(1) +17%; demand for expendables driven by high levels of mining activity
-- Strong execution: revenue(1) +22%; operating profit(1,2) +18%
2022 Operating Review
The Division benefited from high levels of activity in mining
markets, which drove strong demand for expendables. Growth was also
supported by a contribution from acquired businesses, with both
Motion Metrics and Carriere Industrial Supply (CIS) performing
ahead of expectations. The Division's focus on execution delivered
strong year-on-year growth in revenue and operating profit.
People
In terms of safety, excluding the impact from acquired
businesses, TIR was 0.90 (2021: 0.85). While an increase on the
prior year, the Division achieved a reduction in incident severity
and a decrease in TIR in its North American foundries, both of
which were focus areas for the year.
Key learning and development initiatives included training
programmes for the next generation of operational leaders and the
roll-out of the Division's foundry process control training. Other
highlights included technical training for ESCO sales teams on
Motion Metrics(TM) solutions.
Customers
Across our core mining G.E.T. portfolio, the Division gained
market share with positive net conversions in the year. We saw
particularly strong conversion rates in Indonesia and Australia,
and in due course, expect to see a corresponding increase in demand
for expendables in these regions. In addition, customer interest in
our mining attachments proposition continued to gain traction, with
orders up significantly year-on-year, including the first sale of
cable shovel buckets to longstanding G.E.T. customers in Chile and
Canada.
The Division also made good progress on its geographical
expansion initiative and strategy to have direct channels to market
in all major mining regions. This included the acquisition of CIS
and the establishment of a direct channel to market, in partnership
with Minerals, in Central Asia.
Technology
The performance of Motion Metrics was a technology highlight for
the Division. In addition to core range expansions and new module
releases, the technology was successfully integrated with ESCO's
hardware to create a packaged productivity solution that underpins
ESCO's production partnership model. During the year, the first
reference site for this new model was established, whereby our
revenue is directly linked to the productivity benefits we deliver.
Incremental productivity benefits will be achieved through the
Division's proprietary ore characterisation technology, and initial
field trials of this commenced in the fourth quarter.
The Division also made progress on a number of new digital tools
to support operations. This included the launch of a new digital
supply chain tool, and the development of a digital configurator,
which customers will use when ordering mining attachments. Both
systems will improve customers' buying experience, while also
driving operational efficiency.
Performance
Improving operational efficiency of foundry operations is a key
priority for the Division. Good progress was made in the year with
the roll-out of digital process optimisation tools, and the
commencement of the construction of the Division's new foundry in
Xuzhou, China, which will deliver significant efficiency and
capacity benefits. Other footprint investments in the period
included a new facility in Edmonton, Canada, which will improve the
efficiency of the Division's operations in the region.
2022 Financial Review
Constant currency GBPm H1(1) H2 2022 2021(1) Growth(1)
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Orders OE 25 19 44 39 14%
Orders AM 341 322 663 567 17%
Orders Total 366 341 707 606 17%
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Revenue OE 17 26 43 37 18%
Revenue AM 312 337 649 532 22%
Revenue Total 329 363 692 569 22%
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Adjusted operating profit(2) 53 57 110 93 18%
Adjusted operating margin(2) 16.1% 15.7% 15.9% 16.3% -40bps
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Operating cash flow(2) 25 68 93 86 8%
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
Book-to-bill 1.11 0.94 1.02 1.07
----------------------------- ---------------- ---------------- ---------------- ---------------- --------------
1. 2021 and 2022 H1 restated at 2022 average exchange rates
except for operating cash flow.
2. Profit figures before adjusting items. Operating cash flow
(cash generated from operations) excludes additional pension
contributions, exceptional and other adjusting cash items, and
income tax paid. Refer to note 2 of the Audited Results contained
in this press release for further details of alternative
performance measures.
Orders increased 17% on a constant currency basis to GBP707m
(2021: GBP606m). This includes a GBP52m contribution from the
acquisitions of Motion Metrics and CIS. Organic order growth of 8%
was driven by strong demand for mining expendables, particularly
from customers in South America, and year-on-year price increases.
In infrastructure markets, demand was stable at high levels in the
first half of the year before moving lower in Europe during the
second half and also softening, to a lesser extent, in the US
during the fourth quarter. The Division's book-to-bill for the year
was 1.02 as a result of a combination of growing orders and strong
execution. AM represented 94% of orders (2021: 94%) reflecting
ESCO's business model as a provider of highly engineered
expendables to mining and infrastructure markets.
Revenue increased 22% on a constant currency basis to GBP692m
(2021: GBP569m). Mining represented 60% of revenues (2021: 56%) and
infrastructure was 28% (2021: 31%).
Adjusted operating profit increased 18% on a constant currency
basis to GBP110m (2021: GBP93m) as the Division benefited from
increased volumes. In the prior year, the Division benefited from
the favourable phasing of price increases relative to raw material
purchase contract renewals, and from temporary cost savings as
discretionary spend, such as travel, was at lower levels during the
Covid-19 pandemic.
Adjusted operating margin of 15.9% was 40bps lower on a constant
currency basis (2021: 16.3%). Offsetting operational efficiencies
was the reversal of non-recurring benefits in the prior year and
the dilutive effect of Motion Metrics as it delivered significant
year-on-year revenue growth and was break even at an operating
profit level. This was in line with expectation as the business
scaled rapidly while also investing significantly in R&D. In
line with the acquisition plan, we expect Motion Metrics to be
accretive to ESCO operating margins in 2023.
Operating cash flow(2) increased by 8% to GBP93m (2021: GBP86m),
reflecting growth in operating profit offset by a higher working
capital outflow of GBP33m (2021: outflow of GBP13m). Growth in
working capital was driven by inventory build and an increase in
receivables, reflecting order book and revenue growth
respectively.
GROUP FINANCIAL REVIEW
Constant currency(1) As reported
-------------------------------- --------------------------------
Continuing Operations GBPm 2022 2021 Growth 2021 Growth
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Orders OE 605 586 3% n/a n/a
Orders AM 2,039 1,737 17% n/a n/a
Orders Total 2,644 2,323 14% n/a n/a
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Revenue OE 501 462 9% 446 12%
Revenue AM 1,971 1,589 24% 1,488 32%
Revenue Total 2,472 2,051 21% 1,934 28%
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Adjusted operating profit(2) 395 316 25% 296 33%
Adjusted operating margin(2) 16.0% 15.4% 60bps 15.3% 70bps
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Book-to-bill 1.07 1.13 n/a 1.14 n/a
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Total Group GBPm
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Operating cash flow(2) 448 n/a n/a 266 68%
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Free operating cash conversion 87% n/a n/a 63% n/a
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
Net debt 797 n/a n/a 773 -24
------------------------------- ---------------- ---------------- -------------- ---------------- --------------
1. 2021 restated at 2022 average exchange rates.
2. Profit figures before adjusting items. Operating cash flow
(cash generated from operations) excludes additional pension
contributions, exceptional and other adjusting cash items, and
income tax paid. Refer to note 2 of the Audited Results contained
in this press release for further details of alternative
performance measures.
Continuing operations orders at GBP2,644m increased 14% on a
constant currency basis with growth in both Divisions. Minerals
orders were up 13% with AM up 18% as prices of most key commodities
remained well above cost of production, incentivising miners to
increase activity levels and develop more complex and lower grade
ore bodies. ESCO orders increased 17% including a GBP52m
contribution from the acquisitions of Motion Metrics and CIS, while
organic order growth was driven by strong demand for mining
expendables, particularly from customers in South America, and
year-on-year price increases. 77% of orders related to aftermarket
compared to 75% in the prior year.
Continuing operations revenue of GBP2,472m increased 21% on a
constant currency basis. Minerals revenue grew 20% on a constant
currency basis at GBP1,780m (2021: GBP1,482m) ESCO revenue
increased 22% on a constant currency basis to GBP692m (2021:
GBP569m). Aftermarket accounted for 80% of revenues, up from 78% in
the prior year. Reported revenues increased 28% (2021: GBP1,934m),
impacted by a foreign exchange translation tailwind of GBP117m.
Overall book-to-bill at 1.07 reflects strong order growth and focus
on execution, meaning that we enter 2023 with a record order
book.
Continuing operations adjusted operating profit increased by
GBP99m (33%) to GBP395m on a reported basis (2021: GBP296m).
Excluding a GBP20m foreign currency translation tailwind, the
constant currency increase was GBP79m (25%). As explained further
in the Divisional reviews, Minerals adjusted operating profit
increased on a constant currency basis to GBP324m (2021: GBP261m)
and ESCO increased by 18% on a constant currency basis to GBP110m
(2021: GBP93m). Unallocated costs are GBP1m higher than the prior
year at GBP39m.
Continuing operations adjusted operating margin of 16.0% is up
60bps versus last year on a constant currency basis and up 70bps as
reported. The main drivers of the margin improvement are increased
volumes, favourable mix and strong operational execution. These are
partially offset by an adverse transactional foreign exchange
impact and re-investment in our medium-term strategic priorities,
including R&D increasing to 1.9% of sales, and the anticipated
year one dilutive effect of Motion Metrics. As expected, we saw a
return of discretionary spend, such as travel, to normal levels
following lower spend during the Covid-19 pandemic and this was
broadly offset by the non-repeat of the prior year cyber
under-recoveries.
Continuing operations statutory operating profit of GBP308m was
GBP51m favourable to the prior year, with the increase in adjusted
operating profit of GBP99m being offset by an increase in adjusting
items.
Continuing operations adjusting items increased by GBP47m to
GBP87m (2021: GBP40m). Intangibles amortisation increased by GBP1m
to GBP36m (2021: GBP35m). Exceptional items increased by GBP49m to
GBP49m (2021: net nil), primarily due to the wind down of our
Russian operations, which totalled GBP44m. This reflects the loss
on disposal of our ESCO Russia business in September 2022, as well
as the write down of our Minerals Russia business and associated
assets as trading is wound down. Continuing operations included
Russia revenue of GBP52m and adjusted operating profit of GBP8m
which was slightly ahead of the prior year. Other exceptional items
included acquisition and integration costs relating to Motion
Metrics and Carriere Industrial Supply of GBP2m and initial costs
relating to our Performance Excellence programme of GBP3m. Other
adjusting items relating to the Group's legacy US asbestos-related
provision reduced to GBP3m (2021: GBP4m).
Continuing operations net finance costs were GBP47m (2021:
GBP47m) with a reduction in finance costs of GBP2m being offset by
lower interest income. Finance costs decreased following the
settlement of private placement debt in February 2022, which
resulted in an improved interest rate mix. This was partially
offset by a foreign currency translation headwind of GBP4m on USD
denominated debt.
Continuing operations adjusted profit before tax was GBP348m
(2021: GBP249m), after a foreign currency translation tailwind of
GBP16m. The statutory profit before tax from continuing operations
of GBP260m compares to GBP209m in 2021, the increase is primarily
due to the increase in adjusted operating profit offset by the
increase in adjusting items.
Continuing operations adjusted tax charge for the year of GBP93m
(2021: GBP64m) on profit before tax from continuing operations
(before adjusting items) of GBP348m (2021: GBP249m) represents an
adjusted effective tax rate (ETR) of 26.6% (2021: 25.6%). Our ETR
is principally driven by the geographical mix of profits arising in
our business and, to a lesser extent, by the impact of Group
financing and transfer pricing arrangements. A tax credit of GBP45m
has been recognised in relation to continuing operations adjusting
items (2021: GBP9m). This includes an exceptional tax credit of
GBP32m following the recognition of US tax attributes that were
previously held off balance sheet.
Continuing operations profit after tax before adjusting items is
GBP255m (2021: GBP185m). The statutory profit after tax for the
year from continuing operations is GBP213m (2021: GBP155m).
Discontinued operations statutory profit after tax for the year
from discontinued operations was GBP1m (2021: GBP104m) reflecting a
tax credit related to the Oil & Gas Division which was disposed
in the prior year.
Statutory profit for the year after tax from total operations of
GBP214m (2021: GBP259m) reflects the increase in profit from
continuing operations of GBP58m offset by the reduction in
discontinued operations of GBP103m.
Adjusted earnings per share from continuing operations increased
by 38% to 98.4p (2021: 71.3p) reflecting the increased profit
offset by higher effective tax rate in the year. Statutory reported
earnings per share from total operations is 82.5p (2021: 99.7p).
The weighted average number of shares in issue was 258.7m (2021:
259.3m).
Acquisition of Carriere Industrial Supply
The Group completed the acquisition of Carriere Industrial
Supply Limited on 8 April 2022 for an enterprise value of CAD$33m
(GBP20m) less customary debt and working capital adjustments, which
resulted in initial cash consideration of GBP16m and deferred
consideration of GBP3m, of which GBP1m has now been paid. CIS
contributed GBP27m to revenue and adjusted operating profit of
GBP6m in the period from acquisition. These values are inclusive of
revenue and margin which would have been earned pre-acquisition on
sales from ESCO to CIS under the former distributor model.
Cash flow and net debt
Cash generated from total operations(2) increased by GBP182m to
GBP448m (2021: GBP266m) in the year, with the prior year including
an outflow of GBP14m from discontinued operations. The cash
generated from continuing operations(2) increased by GBP168m
primarily driven by the increase in adjusted operating profit,
coupled with an improvement in working capital of GBP54m (2022:
outflow of GBP49m vs 2021: GBP103m). The outflow in working capital
in the year reflects our continued investment in growth, with
inventory increasing as operations prepare to execute a record
closing order book. This was partially offset by a decrease in
debtors as we seek to improve our cash cycle, and despite 15%
year-on-year revenue growth in the last quarter. As a result,
working capital as a percentage of sales decreased to 24% from 28%
in the prior year. Continuing operations utilised non-recourse
invoice discounting facilities, primarily customers supply chain
financing facilities, of GBP45m (2021: GBP19m) and suppliers chose
to utilise supply chain financing facilities of GBP54m (2021:
GBP33m). Net cash generated from operations is GBP321m (2021:
GBP156m).
Net capital expenditure increased by GBP19m to GBP58m (2021:
GBP39m), in part due to the prior year including GBP12m net
proceeds from the sale of a property in China. Lease payments of
GBP31m increased from GBP28m last year mainly due to the
acquisitions of Motion Metrics and Carriere Industrial Supply.
Free operating cash flow increased by GBP157m to GBP342m (2021:
GBP185m) resulting in operating cash conversion (refer to note 2 of
the Audited Results) of 87% (2021: 63%). This was a result of the
above noted improvement in cash generation, partially offset by the
increase in capital expenditure in the year. Over the medium-term,
we continue to target operating cash conversion of 90% to 100%
driven by working capital efficiency and maintaining capex and
lease costs close to one times depreciation. Capex is likely to be
elevated above this level for the next year as we construct our new
ESCO foundry in China and complete our roll-out of SAP and other
digital initiatives, resulting in cash conversion between 80% and
90% over 2023.
Free cash flow from total operations was an inflow of GBP193m
(2021: GBP62m). In addition to the movements noted above, this was
primarily impacted by an increase in tax payments of GBP11m and an
GBP11m decrease in proceeds on settlement of derivative financial
instruments.
Net debt increased by GBP24m to GBP797m (2021 restated: GBP773m)
and includes GBP115m (2021: GBP105m) in respect of IFRS 16
'Leases'. The movement reflects free cash inflow of GBP193m, offset
by foreign exchange retranslation of GBP101m, dividends of GBP67m,
acquisition of Carriere Industrial Supply of GBP15m, exceptional
cash flows of GBP26m and other movements of GBP8m. Net debt to
EBITDA on a lender covenant basis was 1.5 times (2021: 1.9 times)
compared to a covenant level of 3.5 times.
In April 2022, the Group completed the refinancing of its
US$950m Revolving Credit Facility (RCF), which was due to expire in
June 2023. This was replaced with a US$800m RCF, which will mature
in April 2027, with the option to extend for up to a further two
years. The RCF includes a link to the Group's sustainability goals
and the covenant terms are unchanged. In January 2023, the Group
added a further GBP300m loan facility, which will expire in January
2024, subject to a one-year extension option. These refinancing
actions result in the Group having more than GBP800m of immediately
available committed facilities and cash balances following the
maturity of US$200m of US Private placement debt in February
2023.
Pensions
The net IAS 19 funding position improved from a deficit of
GBP57m at December 2021 to a net surplus of GBP15m at December
2022. This is primarily due to changes in financial assumptions,
which resulted in a gain of GBP303m (2021: GBP54m), mainly due to
the rise in discount rates over the period, partially offset by
losses on plan assets of GBP224m (2021: gain GBP8m). These
movements contributed to a credit of GBP65m (2021: GBP96m) being
recognised in the Consolidated Statement of Comprehensive
Income.
Appendix 1 - 2022 continuing operations (1) quarterly order
trends
Reported growth
------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
2021 2021 2021 2021 2021 2022 2022 2022 2022 2022
Division Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
------------- -------------- -------------- -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------
Original
Equipment 66% 50% 71% 9% 45% -18% -3% 13% 19% 2%
Aftermarket -1% 9% 16% 29% 13% 23% 18% 25% 6% 18%
Minerals 15% 20% 30% 23% 22% 9% 11% 21% 10% 13%
------------- -------------- -------------- -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------
Original
Equipment 76% 17% 65% -9% 36% -17% 98% -6% 14% 14%
Aftermarket -2% 31% 34% 40% 24% 37% 19% 14% 1% 17%
ESCO 2% 30% 36% 37% 25% 32% 23% 13% 2% 17%
------------- -------------- -------------- -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------
Original
Equipment 67% 48% 71% 8% 45% -17% 2% 12% 19% 3%
Aftermarket -2% 14% 21% 32% 16% 28% 18% 21% 5% 17%
Continuing
Ops 11% 22% 31% 26% 22% 15% 14% 19% 8% 14%
------------- -------------- -------------- -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------
Book-to-bill 1.22 1.20 1.14 1.01 1.14 1.22 1.13 1.02 0.95 1.07
------------- -------------- -------------- -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------
Like-for-like growth(2)
------------------- ------------------------------------------------------------------------------------------------
2021 2022 2022 2022 2022 2022
Division Q4 Q1 Q2 Q3 Q4 FY
------------------- -------------- --------------- -------------- -------------- --------------- --------------
Original Equipment 9% -18% -3% 13% 19% 2%
Aftermarket 29% 23% 18% 25% 6% 18%
Minerals 23% 9% 11% 21% 10% 13%
------------------- -------------- --------------- -------------- -------------- --------------- --------------
Original Equipment -9% -17% 98% -6% 14% 14%
Aftermarket 39% 31% 9% 5% -10% 8%
ESCO 36% 27% 13% 4% -9% 8%
------------------- -------------- --------------- -------------- -------------- --------------- --------------
Original Equipment 8% -17% 2% 12% 19% 3%
Aftermarket 32% 26% 15% 18% 1% 14%
Continuing Ops 26% 14% 12% 17% 5% 12%
------------------- -------------- --------------- -------------- -------------- --------------- --------------
Book-to-bill 1.01 1.21 1.14 1.02 0.94 1.07
------------------- -------------- --------------- -------------- -------------- --------------- --------------
Quarterly orders(3) GBPm
------------------- ------------------------------------------------------------
2021 2021 2021 2021 2021 2022 2022 2022 2022 2022
Division Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Original Equipment 136 156 132 123 547 113 152 149 147 561
Aftermarket 261 309 274 326 1,170 322 365 342 347 1,376
Minerals 397 465 406 449 1,717 435 517 491 494 1,937
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Original Equipment 12 8 11 8 39 10 15 11 8 44
Aftermarket 131 137 142 157 567 178 163 162 160 663
ESCO 143 145 153 165 606 188 178 173 168 707
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Original Equipment 148 164 143 131 586 123 167 160 155 605
Aftermarket 392 446 416 483 1,737 500 528 504 507 2,039
Continuing
Ops 540 610 559 614 2,323 623 695 664 662 2,644
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Like-for-like orders(2,3) GBPm
------------------- ----------------------------------------
2021 2022 2022 2022 2022 2022
Division Q4 Q1 Q2 Q3 Q4 FY
------------------- ----- ----- ----- ----- ---- ------
Original Equipment 123 113 152 149 147 561
Aftermarket 326 322 365 342 347 1,376
Minerals 449 435 517 491 494 1,937
------------------- ----- ----- ----- ----- ---- ------
Original Equipment 8 10 15 11 8 44
Aftermarket 157 172 149 149 141 611
ESCO 165 182 164 160 149 655
------------------- ----- ----- ----- ----- ---- ------
Original Equipment 131 123 167 160 155 605
Aftermarket 483 494 514 491 488 1,987
Continuing Ops 614 617 681 651 643 2,592
------------------- ----- ----- ----- ----- ---- ------
Appendix 2 - Foreign exchange (FX) rates and continuing
operations(1) profit exposure
Percentage
of FY 2022
2022 average 2021 average operating
FX rates FX rates profits(4)
------------------- ------------ ------------ --------------
US Dollar 1.24 1.38 49%
Australian Dollar 1.78 1.83 14%
Euro 1.17 1.16 6%
Canadian Dollar 1.61 1.73 16%
Chilean Peso 1,078.02 1,043.54 14%
South African Rand 20.19 20.34 3%
Brazilian Real 6.39 7.42 3%
Chinese Yuan 8.30 8.88 3%
Indian Rupee 97.06 101.70 2%
=================== ============ ============ ==============
1. Continuing operations excludes the Oil & Gas Division,
which was sold to Caterpillar Inc. in February 2021 and the
Saudi-Arabian joint venture, which was sold to Olayan Financing
Company in June 2021.
2. Like-for-like excludes the impact of Motion Metrics acquired
on 30 November 2021 and Carriere Industrial Supply Limited acquired
on 8 April 2022.
3. 2021 restated at 2022 average exchange rates.
4. Profit figures before adjusting items. Refer to note 2 of the
Audited Results contained in this press release for further details
of alternative performance measures.
This information includes 'forward-looking statements'. All
statements other than statements of historical fact included in
this presentation, including, without limitation, those regarding
The Weir Group PLC's ("the Group") financial position, business
strategy, plans (including development plans and objectives
relating to the Group's products and services) and objectives of
management for future operations, are forward-looking statements.
These statements contain the words "anticipate", "believe",
"intend", "estimate", "expect" and words of similar meaning. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the
actual results, performance or achievements of the Group to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding the Group's present and future business
strategies and the environment in which the Group will operate in
the future. These forward-looking statements speak only as at the
date of this document. The Group expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change
in the Group's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. Past business and financial performance cannot be relied on
as an indication of future performance.
AUDITED RESULTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2022
Year ended 31 December Year ended 31 December
2022 2021
Adjusting Adjusting
items items
Adjusted (note Statutory Adjusted (note Statutory
results 5) results results 5) results
Notes GBPm GBPm GBPm GBPm GBPm GBPm
============================== ===== ======== ========= ========= ======== ========= =========
Continuing operations
============================== ===== ======== ========= ========= ======== ========= =========
Revenue 3 2,472.1 - 2,472.1 1,933.6 - 1,933.6
============================== ===== ======== ========= ========= ======== ========= =========
Continuing operations
============================== ===== ======== ========= ========= ======== ========= =========
Operating profit before
share of results of
joint ventures 392.3 (87.3) 305.0 294.5 (39.6) 254.9
============================== ===== ======== ========= ========= ======== ========= =========
Share of results of
joint ventures 2.5 - 2.5 1.7 - 1.7
============================== ===== ======== ========= ========= ======== ========= =========
Operating profit 394.8 (87.3) 307.5 296.2 (39.6) 256.6
============================== ===== ======== ========= ========= ======== ========= =========
Finance costs (51.0) - (51.0) (52.7) - (52.7)
============================== ===== ======== ========= ========= ======== ========= =========
Finance income 3.7 - 3.7 5.6 - 5.6
============================== ===== ======== ========= ========= ======== ========= =========
Profit before tax from
continuing operations 347.5 (87.3) 260.2 249.1 (39.6) 209.5
============================== ===== ======== ========= ========= ======== ========= =========
Tax (expense) credit 6 (92.5) 44.9 (47.6) (63.8) 9.4 (54.4)
============================== ===== ======== ========= ========= ======== ========= =========
Profit for the year
from continuing operations 255.0 (42.4) 212.6 185.3 (30.2) 155.1
============================== ===== ======== ========= ========= ======== ========= =========
Profit (loss) for the
year from discontinued
operations 7 1.2 - 1.2 (2.2) 106.1 103.9
============================== ===== ======== ========= ========= ======== ========= =========
Profit (loss) for the
year 256.2 (42.4) 213.8 183.1 75.9 259.0
============================== ===== ======== ========= ========= ======== ========= =========
Attributable to:
============================== ===== ======== ========= ========= ======== ========= =========
Equity holders of the
Company 255.8 (42.4) 213.4 182.6 75.9 258.5
============================== ===== ======== ========= ========= ======== ========= =========
Non-controlling interests 0.4 - 0.4 0.5 - 0.5
============================== ===== ======== ========= ========= ======== ========= =========
256.2 (42.4) 213.8 183.1 75.9 259.0
============================== ===== ======== ========= ========= ======== ========= =========
Earnings per share 8
============================== ===== ======== ========= ========= ======== ========= =========
Basic - total operations 82.5p 99.7p
============================== ===== ======== ========= ========= ======== ========= =========
Basic - continuing operations 98.4p 82.0p 71.3p 59.6p
============================== ===== ======== ========= ========= ======== ========= =========
Diluted - total operations 82.0p 99.0p
============================== ===== ======== ========= ========= ======== ========= =========
Diluted - continuing
operations 97.8p 81.5p 70.8p 59.2p
============================== ===== ======== ========= ========= ======== ========= =========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2022
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
================================================== =========== ===========
Profit for the year 213.8 259.0
=================================================== =========== ===========
Other comprehensive income (expense)
Losses taken to equity on cash flow hedges - (0.2)
=================================================== =========== ===========
Exchange gains (losses) on translation of foreign
operations 223.1 (29.9)
=================================================== =========== ===========
Reclassification of foreign currency translation
reserve on disposal of operations 0.1 (103.4)
=================================================== =========== ===========
Exchange losses on net investment hedges (124.9) (18.2)
=================================================== =========== ===========
Reclassification adjustments on cash flow hedges 0.5 0.1
=================================================== =========== ===========
Tax relating to other comprehensive expense
to be reclassified in subsequent periods (0.1) -
=================================================== =========== ===========
Items that are or may be reclassified to profit
or loss in subsequent periods 98.7 (151.6)
=================================================== =========== ===========
Other comprehensive income (expense) not to
be reclassified to profit or loss in subsequent
periods:
================================================== =========== ===========
Remeasurements on defined benefit plans 65.3 96.3
Tax relating to other comprehensive income
not to be reclassified in subsequent periods (16.3) (21.1)
=================================================== =========== ===========
Items that will not be reclassified to profit
or loss in subsequent periods 49.0 75.2
=================================================== =========== ===========
Net other comprehensive income (expense) 147.7 (76.4)
=================================================== =========== ===========
Total net comprehensive income for the year 361.5 182.6
=================================================== =========== ===========
Attributable to:
================================================== =========== ===========
Equity holders of the Company 360.8 182.5
=================================================== =========== ===========
Non-controlling interests 0.7 0.1
=================================================== =========== ===========
361.5 182.6
================================================== =========== ===========
Total net comprehensive income (expense) for
the year attributable to equity holders of
the Company
================================================== =========== ===========
Continuing operations 359.6 183.3
=================================================== =========== ===========
Discontinued operations 1.2 (0.8)
=================================================== =========== ===========
360.8 182.5
================================================== =========== ===========
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2022
Restated
(note 1)
31 December 31 December
2022 2021
Notes GBPm GBPm
===================================== ===== =========== ===========
ASSETS
===================================== ===== =========== ===========
Non-current assets
===================================== ===== =========== ===========
Property, plant & equipment 462.2 415.9
===================================== ===== =========== ===========
Intangible assets 1,409.9 1,308.4
Investments in joint ventures 15.1 12.3
Deferred tax assets 92.5 57.0
===================================== ===== =========== ===========
Other receivables 76.8 76.5
===================================== ===== =========== ===========
Retirement benefit plan assets 14 50.0 -
Total non-current assets 2,106.5 1,870.1
===================================== ===== =========== ===========
Current assets
===================================== ===== =========== ===========
Inventories 679.1 516.5
===================================== ===== =========== ===========
Trade & other receivables 528.9 505.7
===================================== ===== =========== ===========
Derivative financial instruments 15 8.9 7.1
===================================== ===== =========== ===========
Income tax receivable 41.3 33.0
===================================== ===== =========== ===========
Cash & short-term deposits 691.2 564.4
Total current assets 1,949.4 1,626.7
===================================== ===== =========== ===========
Total assets 4,055.9 3,496.8
===================================== ===== =========== ===========
LIABILITIES
===================================== ===== =========== ===========
Current liabilities
===================================== ===== =========== ===========
Interest-bearing loans & borrowings 406.3 524.1
===================================== ===== =========== ===========
Trade & other payables 623.5 491.1
===================================== ===== =========== ===========
Derivative financial instruments 15 13.2 3.8
===================================== ===== =========== ===========
Income tax payable 7.4 7.6
===================================== ===== =========== ===========
Provisions 12 35.3 36.3
Total current liabilities 1,085.7 1,062.9
===================================== ===== =========== ===========
Non-current liabilities
===================================== ===== =========== ===========
Interest-bearing loans & borrowings 1,082.1 812.8
===================================== ===== =========== ===========
Other payables 1.0 -
===================================== ===== =========== ===========
Derivative financial instruments 15 - 0.1
===================================== ===== =========== ===========
Provisions 12 62.9 69.0
===================================== ===== =========== ===========
Deferred tax liabilities 51.4 40.8
===================================== ===== =========== ===========
Retirement benefit plan deficits 14 34.9 56.7
===================================== ===== =========== ===========
Total non-current liabilities 1,232.3 979.4
===================================== ===== =========== ===========
Total liabilities 2,318.0 2,042.3
===================================== ===== =========== ===========
NET ASSETS 1,737.9 1,454.5
===================================== ===== =========== ===========
CAPITAL & RESERVES
===================================== ===== =========== ===========
Share capital 32.5 32.5
===================================== ===== =========== ===========
Share premium 582.3 582.3
===================================== ===== =========== ===========
Merger reserve 332.6 332.6
===================================== ===== =========== ===========
Treasury shares (14.3) (5.3)
===================================== ===== =========== ===========
Capital redemption reserve 0.5 0.5
===================================== ===== =========== ===========
Foreign currency translation reserve (108.5) (206.5)
===================================== ===== =========== ===========
Hedge accounting reserve 1.9 1.5
===================================== ===== =========== ===========
Retained earnings 899.5 705.9
===================================== ===== =========== ===========
Shareholders' equity 1,726.5 1,443.5
===================================== ===== =========== ===========
Non-controlling interests 11.4 11.0
===================================== ===== =========== ===========
TOTAL EQUITY 1,737.9 1,454.5
===================================== ===== =========== ===========
The financial statements were approved by the Board of Directors
and authorised for issue on 1 March 2023.
JON STANTON JOHN HEASLEY
Director Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2022
Year ended Year ended
31 December 31 December
2022 2021
Notes GBPm GBPm
===================================================== ===== =========== ===========
Total operations
===================================================== ===== =========== ===========
Cash flows from operating activities 16
===================================================== ===== =========== ===========
Cash generated from operations 447.8 266.0
===================================================== ===== =========== ===========
Additional pension contributions paid (9.7) (7.8)
===================================================== ===== =========== ===========
Exceptional and other adjusting cash items (14.2) (8.6)
===================================================== ===== =========== ===========
Exceptional cash items - acquired vendor liabilities (9.7) (11.1)
===================================================== ===== =========== ===========
Income tax paid (93.4) (82.4)
===================================================== ===== =========== ===========
Net cash generated from operating activities 320.8 156.1
===================================================== ===== =========== ===========
Cash flows from investing activities
===================================================== ===== =========== ===========
Acquisitions of subsidiaries, net of cash
acquired 16 (15.2) (67.9)
Purchases of property, plant & equipment (56.1) (44.4)
===================================================== ===== =========== ===========
Purchases of intangible assets (6.6) (8.4)
===================================================== ===== =========== ===========
Exceptional cash item - proceeds from sale
of property - 15.8
===================================================== ===== =========== ===========
Other proceeds from sale of property, plant
& equipment and intangible assets 4.4 14.3
===================================================== ===== =========== ===========
Disposals of discontinued operations, net
of cash disposed and disposal costs 7,16 (0.1) 258.5
===================================================== ===== =========== ===========
Exceptional cash item - disposal of ESCO Russia 16 (2.0) -
===================================================== ===== =========== ===========
Disposals of joint ventures 16 - 24.0
===================================================== ===== =========== ===========
Interest received 4.6 2.6
===================================================== ===== =========== ===========
Dividends received from joint ventures 2.7 0.7
===================================================== ===== =========== ===========
Net cash (used in) generated from investing
activities (68.3) 195.2
===================================================== ===== =========== ===========
Cash flows from financing activities
Proceeds from borrowings 822.8 794.1
===================================================== ===== =========== ===========
Repayments of borrowings (958.9) (903.4)
===================================================== ===== =========== ===========
Lease payments (30.5) (27.8)
===================================================== ===== =========== ===========
Settlement of derivative financial instruments (0.3) 10.6
Interest paid (49.9) (45.6)
Dividends paid to equity holders of the Company 9 (66.7) (29.8)
Dividends paid to non-controlling interests (0.3) (0.4)
===================================================== ===== =========== ===========
Purchase of shares for employee share plans (20.0) (15.0)
===================================================== ===== =========== ===========
Net cash used in financing activities (303.8) (217.3)
===================================================== ===== =========== ===========
Net (decrease) increase in cash & cash equivalents (51.3) 134.0
===================================================== ===== =========== ===========
Cash & cash equivalents at the beginning of
the year 500.0 374.1
===================================================== ===== =========== ===========
Foreign currency translation differences 28.8 (8.1)
===================================================== ===== =========== ===========
Cash & cash equivalents at the end of the
year 16 477.5 500.0
===================================================== ===== =========== ===========
The cash flows from discontinued operations included above are
disclosed separately in note 7.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Attributable
Foreign to equity
Capital currency Hedge holders Non-
Share Share Merger Treasury redemption translation accounting Retained of the controlling Total
capital premium reserve shares reserve reserve reserve earnings Company interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
At 31 December
2020 32.5 582.3 332.6 (6.8) 0.5 (55.4) 1.6 408.3 1,295.6 11.3 1,306.9
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Profit for
the year - - - - - - - 258.5 258.5 0.5 259.0
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Losses taken
to equity
on cash flow
hedges - - - - - - (0.2) - (0.2) - (0.2)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Exchange losses
on translation
of foreign
operations - - - - - (29.5) - - (29.5) (0.4) (29.9)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Reclassification
of exchange
gains on
discontinued
operations - - - - - (103.4) - - (103.4) - (103.4)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Exchange losses
on net
investment
hedges - - - - - (18.2) - - (18.2) - (18.2)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Reclassification
adjustments
on cash flow
hedges - - - - - - 0.1 - 0.1 - 0.1
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Remeasurements
on defined
benefit plans - - - - - - - 96.3 96.3 - 96.3
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Tax relating
to other
comprehensive
income - - - - - - - (21.1) (21.1) - (21.1)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Total net
comprehensive
(expense)
income for
the year - - - - - (151.1) (0.1) 333.7 182.5 0.1 182.6
Cost of
share-based
payments
inclusive
of tax charge - - - - - - - 10.2 10.2 - 10.2
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Dividends - - - - - - - (29.8) (29.8) - (29.8)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Purchase of
shares for
employee share
plans - - - (15.0) - - - - (15.0) - (15.0)
Dividends
paid to
non-controlling
interests - - - - - - - - - (0.4) (0.4)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Exercise of
share-based
payments - - - 16.5 - - - (16.5) - - -
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
At 31 December
2021 32.5 582.3 332.6 (5.3) 0.5 (206.5) 1.5 705.9 1,443.5 11.0 1,454.5
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Attributable
Foreign to equity
Capital currency Hedge holders Non-
Share Share Merger Treasury redemption translation accounting Retained of the controlling Total
capital premium reserve shares reserve reserve reserve earnings Company interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
At 31 December
2021 32.5 582.3 332.6 (5.3) 0.5 (206.5) 1.5 705.9 1,443.5 11.0 1,454.5
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Profit for
the year - - - - - - - 213.4 213.4 0.4 213.8
Exchange gains
on translation
of foreign
operations - - - - - 222.8 - - 222.8 0.3 223.1
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Reclassification
of foreign
currency
translation
reserve on
disposal of
operations - - - - - 0.1 - - 0.1 - 0.1
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Exchange losses
on net
investment
hedges - - - - - (124.9) - - (124.9) - (124.9)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Reclassification
adjustments
on cash flow
hedges - - - - - - 0.5 - 0.5 - 0.5
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Remeasurements
on defined
benefit plans - - - - - - - 65.3 65.3 - 65.3
Tax relating
to other
comprehensive
income - - - - - - (0.1) (16.3) (16.4) - (16.4)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Total net
comprehensive
income for
the year - - - - - 98.0 0.4 262.4 360.8 0.7 361.5
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Cost of
share-based
payments
inclusive
of tax credit - - - - - - - 8.9 8.9 - 8.9
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Dividends - - - - - - - (66.7) (66.7) - (66.7)
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
Purchase of
shares for
employee share
plans - - - (20.0) - - - - (20.0) - (20.0)
Dividends
to
non-controlling
interests - - - - - - - - - (0.3) (0.3)
Exercise of
share-based
payments - - - 11.0 - - - (11.0) - - -
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
At 31 December
2022 32.5 582.3 332.6 (14.3) 0.5 (108.5) 1.9 899.5 1,726.5 11.4 1,737.9
================= ======= ======= ======= ======== ========== =========== ========== ======== ============ =========== =======
1. Accounting policies
A. Basis of preparation
The audited results for the year ended 31 December 2022 ("2022")
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to those companies reporting under those
standards.
The financial information set out in the audited results does
not constitute the Group's statutory financial statements for the
year ended 31 December 2022 within the meaning of section 434 of
the Companies Act 2006 and has been extracted from the full
financial statements for the year ended 31 December 2022.
Statutory financial statements for the year ended 31 December
2021 ("2021"), which received an unqualified audit report, have
been delivered to the Registrar of Companies. The reports of the
auditors on the financial statements for the year ended 31 December
2021 and for the year ended 31 December 2022 were unqualified and
did not contain a statement under either section 498(2) or section
498(3) of the Companies Act 2006. The financial statements for the
period ended 31 December 2022 will be delivered to the Registrar of
Companies and made available to all Shareholders in due course.
These financial statements are presented in Sterling. All values
are rounded to the nearest 0.1 million pounds (GBPm) except where
otherwise indicated.
The financial statements are also prepared on a historic cost
basis except where measured at fair value as outlined in the
accounting policies.
Going concern
The Directors have a reasonable expectation that the Group has
adequate resources to continue to operate for a period of at least
12 months from the date of approval of the financial statements.
For this reason, they continue to adopt the going concern basis of
preparing the financial statements. In forming this view the
Directors have reviewed the Group's budget and sensitivity
analysis.
Basis of consolidation
The Consolidated Financial Statements include the results, cash
flows and assets and liabilities of The Weir Group PLC and its
subsidiaries, and the Group's share of results of its joint
venture. For consolidation purposes, subsidiaries and joint
ventures prepare financial information for the same reporting
period as the Company using consistent accounting policies.
A subsidiary is an entity controlled, either directly or
indirectly, by the Company, where control is achieved when the
Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those
returns through its power over the investee. The results of a
subsidiary acquired during the period are included in the Group's
results from the effective date on which control is transferred to
the Group. The results of a subsidiary sold during the period are
included in the Group's results up to the effective date on which
control is transferred out of the Group. All intragroup
transactions, balances, income and expenses are eliminated on
consolidation.
Non-controlling interests represent the portion of profit or
loss and net assets in subsidiaries that are not held by the Group
and are presented within equity in the Consolidated Balance Sheet,
separately from the Company Shareholders' equity.
New accounting standards, amendments and interpretations
The accounting policies that follow are consistent with those of
the previous period, with the exception of the following standards,
amendments and interpretations which are effective for the year
ended 31 December 2022:
i) Property, plant and equipment: Proceeds before intended use - Amendments to IAS 16;
ii) Annual improvements to IFRS standards 2018-2020;
iii) Onerous contracts - Cost of fulfilling a contract - Amendments to IAS 37; and
iv) Reference to conceptual framework amendments to IFRS 3.
The amendments listed above are not considered to have a
material impact on the Consolidated Financial Statements of the
Group.
The following new accounting standards and interpretations have
been published but are not mandatory for 31 December 2022:
i) Amendments to IAS 1 - Classification of liabilities as
current or non-current;
ii) Narrow scope amendments to IAS 1, Practice statement 2 and
IAS 8;
iii) Amendment to IFRS 16 - Leases on sale and leaseback;
iv) Amendment to IAS 12 - Deferred tax related to assets and
liabilities arising from a single transaction; and
v) IFRS 17 'Insurance contracts' as amended in December
2021.
These amendments have not been early adopted by the Group. The
impact assessment is ongoing, however, from initial review these
standards are not expected to have a material impact on the Group
in the current or future reporting periods or on foreseeable future
transactions.
Climate change
Climate change is considered to be a key element of our overall
sustainability roadmap. As well as considering the impact of
climate change across our business model, the Directors have
considered the impact on the financial statements in accordance
with the Task Force on Climate-related Financial Disclosures (TCFD)
recommendations. Climate change is not considered to have a
material impact on the financial reporting judgements and estimates
arising from our considerations. Overall, sustainability is
recognised in the market as a growth driver for Weir and a key part
of our investment case. This is consistent with our assessment that
climate change is not expected to have a detrimental impact on the
viability of the Group in the medium-term. Specifically we note the
following:
-- The impact of climate change has been included in the
modelling to assess the viability and going concern status of the
Group, both in terms of the preparation of our Strategic Plan,
which underpins our viability statement modelling, and the
modelling of our severe, but plausible downside scenarios;
-- Our assessment of the carrying value of goodwill and
intangible assets included consideration of scenario analysis of
potential climate change on our end markets and this did not
introduce a set of circumstances that were considered could
reasonably lead to an impairment;
-- The impact on the carrying value and useful lives of tangible
assets has been considered and while we continue to invest in
projects to reduce our carbon impact, there is not considered to be
a material impact on our existing asset base; and
-- In May 2021, the Group successfully completed the issuance of
five-year US$800m Sustainability-Linked Notes. The cost of meeting
our linked targets in 2024 has been considered within the above
modelling and the impact is not material.
Further detail on our science-based targets and performance
against them is included in the Emissions Strategy in the Strategic
Report section of the Annual Report.
B. Prior year restatement
Following the acquisition of Motion Metrics during the year
ended 31 December 2021, the Group has completed the review of the
opening balance sheet (OBS) position acquired. As part of this
process, the Group has identified the adjustments below that are
required to the opening balance sheet, which was reported in the
2021 Annual Report.
Restated Consolidated Balance Sheet (extract)
at 31 December 2021
As previously Adjustment
reported to OBS Restated
GBPm GBPm GBPm
============================================== ============= ========== ========
Non-current assets
============================================== ============= ========== ========
Property, plant & equipment 415.3 0.6 415.9
============================================== ============= ========== ========
Intangible assets 1,308.3 0.1 1,308.4
============================================== ============= ========== ========
Current assets
============================================== ============= ========== ========
Inventories 517.1 (0.6) 516.5
============================================== ============= ========== ========
Income tax receivable 32.0 1.0 33.0
============================================== ============= ========== ========
Current liabilities
============================================== ============= ========== ========
Interest-bearing loans & borrowings 523.9 0.2 524.1
============================================== ============= ========== ========
Trade & other payables 490.6 0.5 491.1
============================================== ============= ========== ========
Provisions 36.5 (0.2) 36.3
Non-current liabilities
============================================== ============= ========== ========
Interest-bearing loans & borrowings 812.3 0.5 812.8
============================================== ============= ========== ========
Deferred tax liabilities 40.7 0.1 40.8
============================================== ============= ========== ========
NET ASSETS 1,454.5 - 1,454.5
============================================== ============= ========== ========
C. Use of estimates and judgements
The Group's significant accounting policies are set out below.
The preparation of the Consolidated Financial Statements, in
conformity with IFRS, requires management to make judgements that
affect the application of accounting policies and estimates that
impact the reported amounts of assets, liabilities, income and
expense.
Management bases these judgements on a combination of past
experience, professional expert advice and other evidence that is
relevant to each individual circumstance. Actual results may differ
from these judgements and the resulting estimates, which are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the year in which the estimate is revised.
Areas requiring significant judgement in the current year and on
a recurring basis are presented to the Audit Committee.
Critical judgments and estimates
The areas where management considers critical judgements and
estimates to be required, which are areas more likely to be
materially adjusted within the next 12 months due to inherent
uncertainty regarding estimates and assumptions, are those in
respect of the following:
i) Retirement benefits (estimate)
The assumptions underlying the valuation of retirement benefit
assets and liabilities include discount rates, inflation rates and
mortality assumptions, which are based on actuarial advice. Changes
in these assumptions could have a material impact on the
measurement of the Group's retirement benefit obligations.
ii) Provisions (judgement/estimate)
Management judgement is used to determine when a provision is
recognised, taking into account the commercial drivers that gave
rise to it, the Group's previous experience of similar obligations
and the progress of any associated legal proceedings. The
calculation of provisions typically involves management estimates
of associated cash flows and discount rates. The key provision,
which currently requires a greater degree of management judgement
and estimate is the US asbestos provision and associated insurance
asset, details of which are included in note 12.
iii) Deferred taxation (estimate)
The level of current and deferred tax recognised in the
financial statements is dependent on subjective judgements as to
the interpretation of complex international tax regulations and, in
some cases, the outcome of decisions by tax authorities in various
jurisdictions around the world, together with the ability of the
Group to utilise tax attributes within the time limits imposed by
the relevant tax legislation. The value of the recognised US
deferred tax asset in relation to US tax attributes is based on
expected future US taxable profits with reference to the Group's
ten-year forecast period and assumptions over the intended use of
these tax attributes during this period. The application of this
model and its underlying assumptions may result in future changes
to the deferred tax asset recognised. In particular, the
recognition of US deferred tax assets relating to deferred
intra-group interest deductions is based upon the current policy
and modelling demonstrating full utilisation of that attribute over
the ten-year forecast period. If the current policy were to change
then the utilisation of this tax attribute, as demonstrated by the
model, may reduce resulting in a reduction in US deferred tax asset
recognised of a maximum of GBP41.2m.
Other estimates
iii) Taxation (estimate)
The Group faces a variety of tax risks, which result from
operating in a complex global environment, including the ongoing
reform of both international and domestic tax rules in some of the
Group's larger markets and the challenge to fulfil ongoing tax
compliance filing and transfer pricing obligations given the scale
and diversity of the Group's global operations.
The Group makes provision for open tax issues where it is
probable that an exposure will arise including, in a number of
jurisdictions, ongoing tax audits and uncertain tax positions
including transfer pricing which are by nature complex and can take
a number of years to resolve. In all cases, provisions are based on
management's interpretation of tax law in each country, as
supported where appropriate by discussion and analysis undertaken
by the Group's external advisers, and reflect the single best
estimate of the likely outcome or the expected value for each
liability. Provisions for uncertain tax positions are included in
current tax liabilities and total GBP7.1m at 31 December 2022.
The Group believes it has made adequate provision for such
matters although it is possible that amounts ultimately paid will
be different from the amounts provided, but not materially within
the next 12 months.
Tax disclosures are provided in note 6.
D. Accounting policies
Adjusting items
In order to provide the users of the Consolidated Financial
Statements with a more relevant presentation of the Group's
performance, statutory results for each year have been analysed
between:
i) adjusted results; and
ii) the effect of adjusting items.
The principal adjusting items are summarised below. These
specific items are presented on the face of the Consolidated Income
Statement, along with the related adjusting items' taxation, to
provide greater clarity and a better understanding of the impact of
these items on the Group's financial performance. In doing so, it
also facilitates greater comparison of the Group's underlying
results with prior years and assessment of trends in financial
performance. This split is consistent with how business performance
is measured internally.
i) Intangibles amortisation
Intangibles amortisation is expensed in line with the other
intangible assets policy, with separate disclosure provided to
allow visibility of the impact of both:
a) intangible assets recognised via acquisition, which primarily
relate to items that would not normally be capitalised unless
identified as part of an acquisition opening balance sheet. The
ongoing costs associated with these assets are expensed; and
b) ongoing multi-year investment activities, which currently
include our IT transformation strategy and digitalisation
strategy.
During the year, amortisation of GBP5.7m (2021: GBP5.3m) is
included within adjusted operating profit in relation to assets
which are no longer part of ongoing multi-year investment
activities.
ii) Exceptional items
Exceptional items are items of income and expense which, because
of the nature, size and/or infrequency of the events giving rise to
them, merit separate presentation. Exceptional items may include,
but are not restricted to: profits or losses arising on disposal or
closure of businesses; the cost of significant business
restructuring; significant impairments of intangible or tangible
assets; adjustments to the fair value of acquisition-related items
such as contingent consideration and inventory; acquisitions and
other items deemed exceptional due to their significance, size or
nature.
iii) Other adjusting items
Other adjusting items are those that do not relate to the
Group's current ongoing trading and, due to their nature, are
treated as adjusting items. For example these may include, but are
not restricted to, movements in the provision for asbestos-related
claims or the associated insurance assets, which relate to the Flow
Control Division that was sold in 2019, but the provision remains
with the Group and is in run-off, or past service costs related to
pension liabilities.
Further analysis of the items included in the column 'Adjusting
items' in the Consolidated Income Statement is provided in note
5.
2. Alternative performance measures
The Consolidated Financial Statements of The Weir Group PLC have
been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to those companies reporting under those
standards. In measuring our performance, the financial measures
that we use include those which have been derived from our reported
results in order to eliminate factors which we believe distort
period-on-period comparisons. These are considered alternative
performance measures. This information, along with comparable GAAP
measurements, is useful to investors in providing a basis for
measuring our operational performance. Our management uses these
financial measures, along with the most directly comparable GAAP
financial measures, in evaluating our performance and value
creation. Alternative performance measures should not be considered
in isolation from, or as a substitute for, financial information in
compliance with GAAP. Alternative performance measures as reported
by the Group may not be comparable with similarly titled amounts
reported by other companies.
Below we set out our definitions of alternative performance
measures and provide reconciliations to relevant GAAP measures.
Adjusted results and adjusting items
The Consolidated Income Statement presents Statutory results,
which are provided on a GAAP basis, and Adjusted results
(non-GAAP), which are management's primary area of focus when
reviewing the performance of the business. Adjusting items
represent the difference between Statutory results and Adjusted
results and are defined within the accounting policies section
above. The accounting policy for Adjusting items should be read in
conjunction with this note. Details of each adjusting item are
provided in note 5. We consider this presentation to be helpful as
it allows greater comparability of the underlying performance of
the business from year to year.
EBITDA
EBITDA is operating profit from continuing operations, before
exceptional items, other adjusting items, intangibles amortisation,
and excluding depreciation of owned assets and right-of-use assets.
EBITDA is a widely used measure of a company's profitability of its
operations before any effects of indebtedness, taxes or costs
required to maintain its asset base. EBITDA is used in conjunction
with other GAAP and non-GAAP financial measures to assess our
operational performance. A reconciliation of EBITDA to the closest
equivalent GAAP measure, operating profit, is provided.
2022 2021
GBPm GBPm
======================================================== ===== =====
Continuing operations
======================================================== ===== =====
Operating profit 307.5 256.6
======================================================== ===== =====
Adjusted for:
======================================================== ===== =====
Exceptional and other adjusting items (note 5) 51.4 4.7
======================================================== ===== =====
Adjusting amortisation (note 5) 35.9 34.9
======================================================== ===== =====
Adjusted operating profit 394.8 296.2
======================================================== ===== =====
Non-adjusting amortisation 5.7 5.3
======================================================== ===== =====
Adjusted Earnings before interest, tax and amortisation
(EBITA) 400.5 301.5
======================================================== ===== =====
Depreciation of owned property, plant & equipment 47.0 43.0
======================================================== ===== =====
Depreciation of right-of-use property, plant
& equipment 31.4 27.6
======================================================== ===== =====
Adjusted Earnings before interest, tax, depreciation
and amortisation (EBITDA) 478.9 372.1
======================================================== ===== =====
Operating cash flow (cash generated from operations)
Operating cash flow excludes additional pension contributions,
exceptional and other adjusting cash items and income tax paid.
This is a useful measure to view or assess the underlying cash
generation of the business from its operating activities. A
reconciliation to the GAAP measure 'Net cash generated from
operating activities' is provided in the Consolidated Cash Flow
Statement.
Free operating cash flow and free cash flow
Free operating cash flow (FOCF) is defined as operating cash
flow (cash generated from operations), adjusted for net capital
expenditure, lease payments, dividends received from joint ventures
and purchase of shares for employee share plans. FOCF provides a
useful measure of the cash flows generated directly from the
operational activities after taking into account other cash flows
closely associated with maintaining daily operations.
Free cash flow (FCF) is defined as FOCF further adjusted for net
interest, income taxes, settlement of derivative financial
instruments, additional pension contributions and non-controlling
interest dividends. FCF reflects an additional way of viewing our
available funds that we believe is useful to investors as it
represents cash flows that could be used for repayment of debt,
dividends, exceptional and other adjusting items, or to fund our
strategic initiatives, including acquisitions, if any.
The reconciliation of operating cash flows (cash generated from
operations) to FOCF and subsequently FCF is as follows.
2022 2021
GBPm GBPm
===================================================== ====== ======
Operating cash flow (cash generated from operations) 447.8 266.0
===================================================== ====== ======
Net capital expenditure from purchase & disposal
of property, plant & equipment and intangibles (58.3) (38.5)
===================================================== ====== ======
Lease payments (30.5) (27.8)
===================================================== ====== ======
Dividends received from joint ventures 2.7 0.7
===================================================== ====== ======
Purchase of shares for employee share plans (20.0) (15.0)
===================================================== ====== ======
Free operating cash flow (FOCF) 341.7 185.4
===================================================== ====== ======
Net interest paid (45.3) (43.0)
===================================================== ====== ======
Income tax paid (93.4) (82.4)
===================================================== ====== ======
Settlement of derivative financial instruments (0.3) 10.6
===================================================== ====== ======
Additional pension contributions paid (9.7) (7.8)
===================================================== ====== ======
Non-controlling interest dividends (0.3) (0.4)
===================================================== ====== ======
Free cash flow (FCF) 192.7 62.4
===================================================== ====== ======
Free operating cash conversion
Free operating cash conversion is a non-GAAP key performance
measure defined as free operating cash flow divided by adjusted
operating profit on a total Group basis. The measure is used by
management to monitor the Group's ability to generate cash relative
to operating profits.
2022 2021
GBPm GBPm
======================================== ========== ==========
Continuing operations 394.8 296.2
======================================== ========== ==========
Discontinued operations (note 7) - (0.3)
======================================== ========== ==========
Adjusted operating profit - Total Group 394.8 295.9
======================================== ========== ==========
Free operating cash flow 341.7 185.4
======================================== ========== ==========
Free operating cash conversion % 87% 63%
======================================== ========== ==========
Working capital as a percentage of sales
Working capital as a percentage of sales is calculated based on
working capital as reflected below, divided by revenue, as included
in the Consolidated Income Statement. It is a measure used by
management to monitor how efficiently the Group is managing its
investment in working capital relative to revenue growth.
Restated
(note 1)
2022 2021
GBPm GBPm
================================================ ========== ==========
Working capital as included in the Consolidated
Balance Sheet
================================================ ========== ==========
Other receivables 76.8 76.5
================================================ ========== ==========
Inventories 679.1 516.5
================================================ ========== ==========
Trade & other receivables 528.9 505.7
================================================ ========== ==========
Derivative financial instruments (note 15) (4.3) 3.2
================================================ ========== ==========
Trade & other payables (623.5) (491.1)
================================================ ========== ==========
Other payables (1.0) -
================================================ ========== ==========
656.0 610.8
================================================ ========== ==========
Adjusted for:
================================================ ========== ==========
Insurance contract assets (77.9) (82.4)
================================================ ========== ==========
Interest accruals 5.3 10.9
================================================ ========== ==========
Deferred consideration 2.0 -
================================================ ========== ==========
(70.6) (71.5)
================================================ ========== ==========
Working capital 585.4 539.3
================================================ ========== ==========
Revenue 2,472.1 1,933.6
================================================ ========== ==========
Working capital as a percentage of sales 24% 28%
================================================ ========== ==========
Net debt
Net debt is a widely used liquidity metric calculated by taking
cash and cash equivalents less total current and non-current debt.
A reconciliation of net debt to cash and short-term deposits and
interest-bearing loans and borrowings is provided in note 16. It is
a useful measure used by management and investors when monitoring
the capital management of the Group. Net debt, excluding lease
liabilities and converted at the exchange rates used in the
preparation of the Consolidated Income Statement, is also the basis
for covenant reporting.
3. Segment information
Continuing operations includes two operating Divisions: Minerals
and ESCO. These two Divisions are organised and managed separately
based on the key markets served and each is treated as an operating
segment and a reportable segment under IFRS 8 'Operating Segments'.
The operating and reportable segments were determined based on the
reports reviewed by the Chief Executive Officer, which are used to
make operational decisions.
The Minerals segment is a global leader in engineering,
manufacturing and service processing technology used in abrasive,
high-wear mining applications. Its differentiated technology is
also used in infrastructure and general industrial markets. The
ESCO segment is a global leader in the provision of Ground Engaging
Tools (G.E.T.) for large mining machines. It operates predominantly
in mining and infrastructure markets where its highly engineered
technology improves productivity through extended wear life,
increased safety and reduced energy consumption.
Following the acquisition of Motion Metrics on 30 November 2021
and Carriere Industrial Supply Limited (CIS) on 8 April 2022, these
entities have been included in the ESCO segment. Motion Metrics is
a mining technology business, which is the market-leading developer
of innovative artificial intelligence (AI) and 3D rugged Machine
Vision Technology, used in mines worldwide. CIS is a premier
manufacturer and distributor of highly engineered wear parts and
aftermarket service provider to the Canadian mining industry.
During 2021, the Group completed the disposal of its Oil &
Gas Division and, in line with IFRS 5 'Non-current Assets Held for
Sale and Discontinued Operations', the Group classified the
Division as a discontinued operation as disclosed in note 7.
The Chief Executive Officer assesses the performance of the
operating segments based on operating profit from continuing
operations before exceptional and other adjusting items ('segment
result'). Finance income and expenditure and associated
interest-bearing liabilities and financing derivative financial
instruments are not allocated to segments as all treasury activity
is managed centrally by the Group Treasury function. The amounts
provided to the Chief Executive Officer with respect to assets and
liabilities are measured in a manner consistent with that of the
financial statements. The assets are allocated based on the
operations of the segment and the physical location of the asset.
The liabilities are allocated based on the operations of the
segment.
Transfer prices between business segments are set on an arm's
length basis, in a manner similar to transactions with third
parties.
The segment information for the reportable segments for 2022 and
2021 is disclosed below. Information for the former Oil & Gas
Division is included in note 7.
Total continuing
Minerals ESCO operations
2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm
================================== ======= ======= ===== ===== ======== ========
Revenue
================================== ======= ======= ===== ===== ======== ========
Sales to external customers 1,780.5 1,422.1 691.6 511.5 2,472.1 1,933.6
================================== ======= ======= ===== ===== ======== ========
Inter-segment sales 0.1 - 3.2 2.1 3.3 2.1
================================== ======= ======= ===== ===== ======== ========
Segment revenue 1,780.6 1,422.1 694.8 513.6 2,475.4 1,935.7
================================== ======= ======= ===== ===== ======== ========
Eliminations (3.3) (2.1)
======== ========
2,472.1 1,933.6
======== ========
Sales to external customers - 2021 at 2022 average exchange
rates
Sales to external customers 1,780.5 1,481.6 691.6 569.0 2,472.1 2,050.6
================================== ======= ======= ===== ===== ======== ========
Segment result
================================== ======= ======= ===== ===== ======== ========
Segment result before share
of results of joint ventures 323.5 251.0 107.5 81.6 431.0 332.6
================================== ======= ======= ===== ===== ======== ========
Share of results of joint
ventures - - 2.5 1.7 2.5 1.7
================================== ======= ======= ===== ===== ======== ========
Segment result 323.5 251.0 110.0 83.3 433.5 334.3
================================== ======= ======= ===== ===== ======== ========
Unallocated expenses (38.7) (38.1)
======== ========
Adjusted operating profit 394.8 296.2
======== ========
Adjusting items (87.3) (39.6)
======== ========
Net finance costs (47.3) (47.1)
======== ========
Profit before tax from continuing
operations 260.2 209.5
======== ========
Segment result - 2021 at 2022 average exchange rates
Segment result before share
of results of joint ventures 323.5 260.8 107.5 91.0 431.0 351.8
================================== ======= ======= ===== ===== ======== ========
Share of results of joint
ventures - - 2.5 1.9 2.5 1.9
================================== ======= ======= ===== ===== ======== ========
Segment result 323.5 260.8 110.0 92.9 433.5 353.7
================================== ======= ======= ===== ===== ======== ========
Unallocated expenses (38.7) (38.1)
======== ========
Adjusted operating profit 394.8 315.6
======== ========
Revenues from any single external customer do not exceed 10% of
Group revenue.
Discontinued
Minerals ESCO operations Total Group
================ ================= ============== =================
Restated Restated
(note (note
1) 1)
2022 2021 2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================ ======= ======= ======= ======== ====== ====== ======= ========
Assets & liabilities
============================ ======= ======= ======= ======== ====== ====== ======= ========
Intangible assets 600.8 563.8 809.0 741.8 - - 1,409.8 1,305.6
============================ ======= ======= ======= ======== ====== ====== ======= ========
Property, plant &
equipment 303.4 280.1 147.6 124.3 - - 451.0 404.4
============================ ======= ======= ======= ======== ====== ====== ======= ========
Working capital assets 902.0 773.2 307.3 238.4 - - 1,209.3 1,011.6
============================ ======= ======= ======= ======== ====== ====== ======= ========
1,806.2 1,617.1 1,263.9 1,104.5 - - 3,070.1 2,721.6
============================ ======= ======= ======= ======== ====== ====== ======= ========
Investments in joint
ventures - - 15.1 12.3 - - 15.1 12.3
Segment assets 1,806.2 1,617.1 1,279.0 1,116.8 - - 3,085.2 2,733.9
Unallocated assets 970.7 762.9
======= ========
Total assets 4,055.9 3,496.8
======= ========
Working capital liabilities 543.7 406.9 139.9 119.9 - - 683.6 526.8
Segment liabilities 543.7 406.9 139.9 119.9 - - 683.6 526.8
Unallocated liabilities 1,634.4 1,515.5
======= ========
Total liabilities 2,318.0 2,042.3
======= ========
Other segment information - total
Group
============================================== ======= ======== ====== ====== ======= ========
Segment additions
to non-current assets 68.7 60.2 29.4 16.8 - 0.4 98.1 77.4
============================ ======= ======= ======= ======== ====== ====== ======= ========
Unallocated additions
to non-current assets 1.1 0.2
======= ========
Total additions to
non-current assets 99.2 77.6
======= ========
Other segment information - total
Group
============================================== ======= ======== ====== ====== ======= ========
Segment depreciation
& amortisation 73.8 66.4 43.1 34.8 - - 116.9 101.2
============================ ======= ======= ======= ======== ====== ====== ======= ========
Segment impairment
of property, plant
& equipment 1.3 (1.4) - - - - 1.3 (1.4)
============================ ======= ======= ======= ======== ====== ====== ======= ========
Segment impairment
of intangible assets 0.3 0.1 - - - - 0.3 0.1
============================ ======= ======= ======= ======== ====== ====== ======= ========
Unallocated depreciation
& amortisation 3.1 9.6
======= ========
Total depreciation,
amortisation & impairment 121.6 109.5
======= ========
The asset and liability balances include right-of-use assets and
lease liabilities.
Unallocated assets primarily comprise cash and short-term
deposits, asbestos-related insurance asset, Trust Owned Life
Insurance policy investments, derivative financial instruments,
income tax receivable, deferred tax assets and elimination of
intercompany as well as those assets which are used for general
head office purposes. Unallocated liabilities primarily comprise
interest-bearing loans and borrowings and related interest
accruals, derivative financial instruments, income tax payable,
provisions, deferred tax liabilities, elimination of intercompany
and retirement benefit deficits as well as liabilities relating to
general head office activities. Segment additions to non-current
assets include right-of-use assets.
Geographical information
Geographical information in respect of revenue and non-current
assets for 2022 and 2021 is disclosed below. Revenues are allocated
based on the location to which the product is shipped. Assets are
allocated based on the location of the assets and operations.
Non-current assets consist of property, plant and equipment,
intangible assets and investments in joint ventures.
Middle
Asia South East Europe
UK US Canada Pacific Australasia America & Africa & FSU Total
============================
Year ended 31 December
2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
Revenue from continuing
operations
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
Sales to external customers 34.8 418.1 378.3 288.2 336.3 540.8 295.3 180.3 2,472.1
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
Non-current assets 310.3 765.5 177.7 184.6 210.5 82.9 105.1 50.6 1,887.2
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
Middle
Asia South East Europe
UK US Canada Pacific Australasia America & Africa & FSU Total
============================
Year ended 31 December
2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
Revenue from continuing
operations
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
Sales to external customers 23.8 315.9 266.0 237.9 304.0 387.5 224.1 174.4 1,933.6
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
Non-current assets
(restated note 1) 314.1 699.3 159.6 150.0 201.5 71.1 86.9 54.1 1,736.6
============================ ===== ===== ====== ======== =========== ======== ========= ====== =======
The following disclosures are given in relation to continuing
operations.
2022 2021
GBPm GBPm
================================================== ======= =======
An analysis of the Group's revenue is as follows:
================================================== ======= =======
Original equipment 456.0 386.9
================================================== ======= =======
Aftermarket parts 1,825.7 1,366.6
================================================== ======= =======
Sales of goods 2,281.7 1,753.5
================================================== ======= =======
Provision of services - aftermarket 141.9 121.0
================================================== ======= =======
Construction contracts - original equipment 45.5 59.1
================================================== ======= =======
Subscription services 3.0 -
================================================== ======= =======
Revenue 2,472.1 1,933.6
================================================== ======= =======
Total continuing
Minerals ESCO operations
================ ============ ==================
2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm
=================== ======= ======= ===== ===== ======== ========
Timing of revenue
recognition
=================== ======= ======= ===== ===== ======== ========
At a point in time 1,682.7 1,290.6 681.9 508.3 2,364.6 1,798.9
=================== ======= ======= ===== ===== ======== ========
Over time 97.9 131.5 12.9 5.3 110.8 136.8
=================== ======= ======= ===== ===== ======== ========
Segment revenue 1,780.6 1,422.1 694.8 513.6 2,475.4 1,935.7
=================== ======= ======= ===== ===== ======== ========
Eliminations (3.3) (2.1)
======== ========
2,472.1 1,933.6
======== ========
4. Revenue & expenses
The following disclosures are given in relation to continuing
operations.
Year ended 31 December Year ended 31 December
2022 2021
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results items results results items results
GBPm GBPm GBPm GBPm GBPm GBPm
========================================= ========= ========= ========= ========= ========= =========
A reconciliation of revenue to operating
profit is as follows:
========================================= ========= ========= ========= ========= ========= =========
Revenue 2,472.1 - 2,472.1 1,933.6 - 1,933.6
========================================= ========= ========= ========= ========= ========= =========
Cost of sales (1,573.4) (24.8) (1,598.2) (1,237.2) (4.4) (1,241.6)
========================================= ========= ========= ========= ========= ========= =========
Gross profit 898.7 (24.8) 873.9 696.4 (4.4) 692.0
========================================= ========= ========= ========= ========= ========= =========
Other operating income 10.4 - 10.4 14.6 4.8 19.4
========================================= ========= ========= ========= ========= ========= =========
Selling & distribution costs (279.8) (4.2) (284.0) (218.9) - (218.9)
========================================= ========= ========= ========= ========= ========= =========
Administrative expenses (237.0) (58.3) (295.3) (197.6) (40.0) (237.6)
========================================= ========= ========= ========= ========= ========= =========
Share of results of joint ventures 2.5 - 2.5 1.7 - 1.7
========================================= ========= ========= ========= ========= ========= =========
Operating profit 394.8 (87.3) 307.5 296.2 (39.6) 256.6
========================================= ========= ========= ========= ========= ========= =========
Details of adjusting items are included in note 5.
5. Adjusting items
2022 2021
GBPm GBPm
===================================================== ====== ======
Recognised in arriving at operating profit from
continuing operations
===================================================== ====== ======
Intangibles amortisation (35.9) (34.9)
===================================================== ====== ======
Exceptional items
===================================================== ====== ======
Acquisition and integration related costs (2.4) (1.9)
===================================================== ====== ======
Russian operations wind down (44.0) -
===================================================== ====== ======
Cybersecurity incident response - (4.7)
===================================================== ====== ======
Performance Excellence programme (2.9) -
===================================================== ====== ======
Other restructuring and rationalisation activities 0.4 6.3
(48.9) (0.3)
===================================================== ====== ======
Other adjusting items
===================================================== ====== ======
Asbestos-related provision (2.5) (4.4)
Total adjusting items (87.3) (39.6)
===================================================== ====== ======
Recognised in arriving at operating profit from
discontinued operations
===================================================== ====== ======
Exceptional items
===================================================== ====== ======
Onerous purchase contracts - 0.9
Total adjusting items (note 7) - 0.9
===================================================== ====== ======
Continuing operations
Intangibles amortisation
Intangibles amortisation of GBP35.9m (2021: GBP34.9m) relates to
acquisition related assets and ongoing multi-year investment
activities, as outlined in the accounting policy in note 1.
Exceptional items
Exceptional items in the year include GBP2.4m of acquisition and
integration related costs, of which GBP1.6m relates to the
acquisition of Carriere Industrial Supply Limited (CIS) which
completed on 8 April 2022 (note 11). The charge includes an unwind
of a fair value adjustment of GBP0.6m, recorded in the opening
balance sheet in relation to fabricated inventory products and
costs of GBP1.0m related to adviser fees, due diligence and initial
integration costs which were fully cash settled in the year. The
remaining GBP0.8m (2021: GBP2.8m) expense relates to further
acquisition and integration costs for the prior year acquisition of
Motion Metrics, which completed on 30 November 2021 (note 11). The
prior year also included an accrual reversal of GBP0.9m in relation
to ESCO integration costs, which were initially expensed in 2019.
In total, acquisition and integration costs have resulted in a
GBP3.7m exceptional cash outflow in the year, including items
expensed in the prior year. We anticipate final integration costs
of approximately GBP2.0m in 2023 in respect of Motion Metrics and
CIS.
In March 2022, the Group announced the suspension of its
business and operations in Russia and commenced the wind down of
these. In the ESCO Division, the business transferred ownership of
its Russia business to the local management team. The legal
transfer and disposal completed on 15 September 2022, which
resulted in an exceptional charge of GBP4.9m. The net assets,
including cash balances of GBP1.9m, at the date of disposal were
GBP4.7m. Costs of disposal totalled GBP0.1m for legal fees. A
further loss of GBP0.1m has been recognised in respect of recycling
the cumulative foreign exchange gains and losses from the foreign
currency translation reserve to the income statement, which is
recognised only at the time of disposal. In the Minerals Division,
the process of winding down operations of its Russian subsidiary is
complex and ongoing. An exceptional charge of GBP25.4m has been
recognised, which represents provision for assets on the
subsidiary's balance sheet at December 2022 of GBP19.5m, of which
GBP10.2m relates to inventory and GBP5.5m relates to trade
receivables, where recoverability is deemed uncertain, severance
costs of GBP3.3m, customer penalties of GBP1.8m and other costs of
GBP0.8m mainly relating to staff retention. Exceptional charges
have also been recognised across other Minerals entities, including
provisions for inventory of GBP7.0m, primarily for 'made to order'
items that are currently unable to be shipped to Russia, and
provision for receivables of GBP2.8m, primarily due from sanctioned
customers. Exiting the Russian market also led to other costs
across Europe, which totalled GBP3.9m and primarily reflects
severance and incremental warehousing costs as a result of delayed
or cancelled shipments. This has resulted in a total exceptional
charge of GBP39.1m, of which GBP29.5m is non-cash related.
Exceptional cash outflows in respect of the Russia wind down are
GBP5.3m in the year, with the remainder expected to be paid in
2023.
An initial exceptional charge in respect of the Group's
Performance Excellence programme of GBP2.9m has been recognised in
the year. The three-year programme aims to transform the way we
work with more agile and efficient business processes, with a focus
on customer and service-delivery. The programme includes capacity
optimisation, lean processes and global business services. The
charge in the year includes advisory fees of GBP0.7m in relation to
the Performance Excellence programme scoping and GBP2.2m in
Australia for a service centre restructuring, which is part of the
capacity optimisation element of the strategy. This has resulted in
an exceptional cash outflow, in respect of the Performance
Excellence programme, in the year of GBP2.2m with a remaining
GBP0.6m expected in H1 2023.
An exceptional credit for other restructuring and
rationalisation activities of GBP0.4m represents releases of
unutilised prior year provisions in China, Malaysia and Peru.
In the prior year, restructuring and rationalisation activities
primarily represented a land sale in Sendayan, Malaysia. The land
sold was part of our restructuring decision to exit Minerals
Malaysia foundry operations in 2018 and resulted in a net gain of
GBP4.8m and an exceptional cash inflow of GBP15.8m. The remaining
credit of GBP1.5m related to a partial reversal of charges
recognised in North America and China in prior years. Other
exceptional items included cybersecurity costs of GBP4.7m that were
incurred as a direct result of the cybersecurity incident in
September 2021. These costs primarily related to specialist
advisory fees incurred centrally to investigate and respond to the
incident, incremental hardware costs expensed to facilitate
business continuity and impairment of existing hardware. This
resulted in a GBP2.2m exceptional cash outflow in the prior year.
In 2022, a further GBP2.4m was paid in relation to cybersecurity
costs expensed in 2021. A further GBP0.6m exceptional cash was paid
in the year in relation to items expensed in the prior year.
Other adjusting items
A charge of GBP2.5m (2021: GBP4.4m) has been recorded in respect
of movements in the US asbestos-related liability and associated
insurance asset, plus settlements for post-1981 US asbestos-related
claims that relate to legacy Group products. Further details of
this are included in note 12.
Discontinued operations
Exceptional items
The prior year exceptional item for discontinued operations of
GBP0.9m related to final adjustments to an onerous purchase
contracts provision.
6. Income tax expense
2022 2021
GBPm GBPm
============================================== ====== ======
Continuing Group - UK (11.8) (5.2)
============================================== ====== ======
Continuing Group - Overseas (35.8) (49.2)
============================================== ====== ======
Income tax expense in the Consolidated Income
Statement for continuing operations (47.6) (54.4)
============================================== ====== ======
The total income tax expense is disclosed in the Consolidated
Income Statement as follows.
2022 2021
GBPm GBPm
======================= ============================== ====== ======
Tax (expense)
credit - adjusted results (92.5) (63.8)
======================= ============================== ====== ======
- adjusting items 44.9 9.4
====================================================== ====== ======
Continuing operations income tax expense in the
Consolidated Income Statement (47.6) (54.4)
====== ======
Discontinued operations income tax credit (expense)
in the Consolidated Income Statement 1.2 (6.1)
====== ======
Total income tax expense in the Consolidated
Income Statement (46.4) (60.5)
======================================================= ====== ======
The tax credit of GBP44.9m (2021: GBP9.4m) which has been
recognised in adjusting items includes GBP8.6m (2021: GBP7.9m) in
respect of adjusting intangibles amortisation and impairment. The
remaining GBP36.3m (2021: GBP1.5m) relates to exceptional and other
adjusting items and includes a credit of GBP32.0m which arose on
the recognition of US tax attributes that were previously held off
balance sheet. These attributes relate primarily to the deferral of
current tax relief on intra-group payments of interest by the US
group. Recognition is supported by the application of detailed
modelling of US taxable income over a ten-year forecast period and,
in particular, the anticipated full utilisation of these attributes
over the same period.
The income tax expense included in the Continuing Group's share
of results of joint ventures is as follows.
2022 2021
GBPm GBPm
=============== ===== =====
Joint ventures (0.2) (0.2)
=============== ===== =====
7. Discontinued operations
In the prior year, the Group disposed of the Oil & Gas
Division (excluding the Group's joint venture, Arabian Metals
Company (AMCO)) on 1 February 2021 to Caterpillar Inc. (CAT) for an
enterprise value of US$375.0m and a final consideration of
GBP282.8m. On 30 June 2021, the Group completed the sale of the
remaining Oil & Gas joint venture AMCO to Olayan Financing
Company (Olayan). A consideration of US$37.8m (GBP27.4m) was
received compared to the original fair market value of US$30.0m
agreed with CAT. The agreement with CAT in respect of the joint
venture sale was that any proceeds received from Olayan above the
fair market value would be split 90:10 in favour of CAT, subject to
certain capital gains tax and dividend retentions. This resulted in
a payment to CAT of US$4.7m (GBP3.4m) in July 2021 and a payment of
capital gains tax to the Saudi authorities of US$6.3m (GBP4.6m) in
August 2021.
In the current year, a current tax credit of GBP1.2m has been
recognised following the filing of the 2021 US tax return for Oil
& Gas Division related activity.
Financial information relating to the above rebate is set out in
the table below with prior year comparatives for reference. For
full disclosure of the disposals refer to note 8 of the Group's
2021 Annual Report.
Year ended 31 December Year ended 31 December
2022 2021
Adjusting Adjusting
items items
Adjusted (note Statutory Adjusted (note Statutory
results 5) results results 5) results
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue - - - 25.1 - 25.1
======================================== ======== ========= ========= ======== ========= =========
Operating (loss) profit before
share of results of joint ventures - - - (1.9) 0.9 (1.0)
======================================== ======== ========= ========= ======== ========= =========
Share of results of joint ventures - - - 1.6 - 1.6
======================================== ======== ========= ========= ======== ========= =========
Operating (loss) profit - - - (0.3) 0.9 0.6
======================================== ======== ========= ========= ======== ========= =========
Finance costs - - - (0.2) - (0.2)
======================================== ======== ========= ========= ======== ========= =========
Finance income - - - - - -
======================================== ======== ========= ========= ======== ========= =========
(Loss) profit before tax from
discontinued operations - - - (0.5) 0.9 0.4
======================================== ======== ========= ========= ======== ========= =========
Tax credit (expense) 1.2 - 1.2 (1.7) - (1.7)
======================================== ======== ========= ========= ======== ========= =========
Profit (loss) after tax from
discontinued operations 1.2 - 1.2 (2.2) 0.9 (1.3)
======================================== ======== ========= ========= ======== ========= =========
Gain on sale of Oil & Gas Division
(see below) - - - - 99.2 99.2
======================================== ======== ========= ========= ======== ========= =========
Gain on sale of joint venture
(see below) - - - - 6.0 6.0
======================================== ======== ========= ========= ======== ========= =========
Profit (loss) for the year from
discontinued operations 1.2 - 1.2 (2.2) 106.1 103.9
Reclassification of foreign currency
translation reserve - (103.4)
======================================== ======== ========= ========= ======== ========= =========
Other comprehensive expense from
discontinued operations - (1.3)
======================================== ======== ========= ========= ======== ========= =========
Total net comprehensive income
(expense) from discontinued operations 1.2 (0.8)
======================================== ======== ========= ========= ======== ========= =========
The prior year reconciliation from revenue to operating profit
included cost of sales of GBP21.8m, other operating income of
GBP0.3m, selling and distribution costs of GBP1.4m, administrative
expenses of GBP4.1m and share of result of joint venture of
GBP1.6m.
The prior year gain on sale is largely attributable to the
recycling of cumulative foreign exchange gains and losses from the
foreign currency translation reserve to the income statement, which
is recognised only at the time of sale. In total, GBP103.4m was
recycled from the foreign currency translation reserve for the Oil
& Gas Division, including AMCO.
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
============================================= =========== ===========
Cash flows from operating activities - (16.3)
============================================= =========== ===========
Cash flows from investing activities (0.1) (0.2)
============================================= =========== ===========
Cash flows from financing activities - (1.1)
============================================= =========== ===========
Net decrease in cash & cash equivalents from
discontinued operations (0.1) (17.6)
============================================= =========== ===========
Earnings per share
Earnings per share from discontinued operations were as
follows.
2022 2021
pence pence
======== ===== =====
Basic 0.5 40.1
======== ===== =====
Diluted 0.5 39.8
======== ===== =====
The earnings per share figures were derived by dividing the net
profit (loss) attributable to equity holders of the Company from
discontinued operations by the weighted average number of ordinary
shares, for both basic and diluted amounts, shown in note 8.
8. Earnings per share
Basic earnings per share amounts are calculated by dividing net
profit for the year attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue after
deducting the own shares held by employee share ownership trusts
and treasury shares. Diluted earnings per share is calculated by
dividing the net profit attributable to equity holders of the
Company by the weighted average number of ordinary shares
outstanding during the year, adjusted for the effect of dilutive
share awards.
The following reflects the earnings used in the calculation of
earnings per share.
2022 2021
================================================ ===== =====
Profit attributable to equity holders of the
Company
================================================ ===== =====
Total operations(1) (GBPm) 213.4 258.5
================================================ ===== =====
Continuing operations(2) (GBPm) 212.2 154.6
================================================ ===== =====
Continuing operations before adjusting items(2)
(GBPm) 254.6 184.8
================================================ ===== =====
The following reflects the share numbers used in the calculation
of earnings per share, and the difference between the weighted
average share capital for the purposes of the basic and the diluted
earnings per share calculations.
2022 2021
Shares Shares
million million
=============================================== ======== ========
Weighted average number of ordinary shares for
basic earnings per share 258.7 259.3
=============================================== ======== ========
Effect of dilution: employee share awards 1.6 1.7
=============================================== ======== ========
Adjusted weighted average number of ordinary
shares for diluted earnings per share 260.3 261.0
=============================================== ======== ========
The profit attributable to equity holders of the Company used in
the calculation of both basic and diluted earnings per share from
continuing operations before adjusting items is calculated as
follows.
2022 2021
GBPm GBPm
=============================================== ===== =====
Net profit attributable to equity holders from
continuing operations(2) 212.2 154.6
=============================================== ===== =====
Adjusting items net of tax 42.4 30.2
=============================================== ===== =====
Net profit attributable to equity holders from
continuing operations before adjusting items 254.6 184.8
=============================================== ===== =====
2022 2021
pence pence
================================================== ===== =====
Basic earnings per share
================================================== ===== =====
Total operations(1) 82.5 99.7
================================================== ===== =====
Continuing operations(2) 82.0 59.6
================================================== ===== =====
Continuing operations before adjusting items(2) 98.4 71.3
================================================== ===== =====
Diluted earnings per share
================================================== ===== =====
Total operations(1) 82.0 99.0
================================================== ===== =====
Continuing operations(2) 81.5 59.2
================================================== ===== =====
Continuing operations before adjusting items(2) 97.8 70.8
================================================== ===== =====
1. Adjusted for a profit of GBP0.4m (2021: profit of GBP0.5m) in
respect of non-controlling interests for total operations.
2. Adjusted for a profit of GBP0.4m (2021: profit of GBP0.5m) in
respect of non-controlling interests for continuing operations.
There have been 839 share awards (2021: 6,258) exercised between
the reporting date and the date of signing of these financial
statements. They were settled out of existing shares held in
trust.
Earnings per share from discontinued operations is disclosed in
note 7.
9. Dividends paid & proposed
2022 2021
GBPm GBPm
==================================================== ==== ====
Declared & paid during the year
==================================================== ==== ====
Equity dividends on ordinary shares
==================================================== ==== ====
Final dividend for 2021: 12.30p (2020: 0.00p) 31.8 -
==================================================== ==== ====
Interim dividend for 2022: 13.50p (2021: 11.50p) 34.9 29.8
==================================================== ==== ====
66.7 29.8
==================================================== ==== ====
Proposed for approval by Shareholders at the Annual
General Meeting
==================================================== ==== ====
Final dividend for 2022: 19.30p (2021: 12.30p) 49.9 31.9
==================================================== ==== ====
The current year dividend is in line with the capital allocation
policy announced in our 2020 Annual Report and Financial
Statements, under which the Group intends to distribute 33% of
adjusted earnings by way of dividend. As a result, dividend cover
in 2022 is 3.0 times.
The proposed dividend is based on the number of shares in issue,
excluding treasury shares held, at the date that the financial
statements were approved and authorised for issue. The final
dividend may differ due to increases or decreases in the number of
shares in issue between the date of approval of this Annual Report
and Financial Statements and the record date for the final
dividend.
10. Property, plant & equipment and intangible assets
2022 2021
GBPm GBPm
======================================================== ==== ====
Additions of property, plant & equipment and intangible
assets
======================================================== ==== ====
- owned land & buildings 4.8 4.0
======================================================== ==== ====
- owned plant & equipment 55.9 44.3
======================================================== ==== ====
- right-of-use land & buildings 24.9 12.4
======================================================== ==== ====
- right-of-use plant & equipment 6.8 8.9
======================================================== ==== ====
- intangible assets 6.8 8.0
======================================================== ==== ====
99.2 77.6
======================================================== ==== ====
The above additions relate to the normal course of business and
do not include any additions made by way of business
combinations.
11. Business combinations
Carriere Industrial Supply Limited
On 8 April 2022, the Group completed the acquisition of 100% of
the voting rights of Carriere Industrial Supply Limited (CIS) for
an enterprise value of CAD$32.5m (GBP20.2m). CIS is a
Canadian-based manufacturer and distributor of wear parts, and an
aftermarket service provider to the mining industry, with exposure
across both surface and underground mining in Ontario and Quebec.
The acquisition has joined the ESCO Division and reporting segment
as CIS is already an established distributor of ESCO's core Ground
Engaging Tools (G.E.T.) products. This acquisition will maintain
ESCO's leading core G.E.T. presence in Ontario and provide
opportunities to expand into fabricated hardware and underground
capabilities.
Initial consideration of GBP16.2m was paid on completion, with a
further deferred consideration of GBP2.5m recognised reflecting
indemnification and working capital hold backs. In October 2022,
the Group paid a further GBP0.1m in relation to the finalisation of
the completion accounts process and settled GBP0.5m of the deferred
consideration in relation to the working capital completion
mechanism. The remaining deferred consideration of GBP2.0m for
indemnification is payable in two instalments; on the first and
second anniversary of the acquisition date. The final adjusted
purchase price of CAD$30.3m (GBP18.8m) represents the enterprise
value adjusted for certain working capital, net debt and
transaction fee adjustments.
The provisional fair values, which are subject to finalisation
within 12 months of acquisition, are disclosed in the table below.
There are certain intangible assets included in the GBP3.7m of
goodwill recognised that cannot be individually separated and
reliably measured due to their nature. These items include the
future growth of the business, synergies and an assembled
workforce.
2022
Carriere Industrial Supply Limited provisional fair values GBPm
=========================================================== ======
Property, plant & equipment - owned assets 3.6
Intangible assets - customer and distributor relationships 3.1
Inventories 10.5
=========================================================== ======
Trade & other receivables 7.5
=========================================================== ======
Income tax receivable 0.1
=========================================================== ======
Cash & cash equivalents 1.6
=========================================================== ======
Interest-bearing loans & borrowings (0.4)
=========================================================== ======
Trade & other payables (9.3)
Deferred tax liabilities (1.6)
Provisional fair value of net assets 15.1
Goodwill arising on acquisition 3.7
=========================================================== ======
Total consideration 18.8
=========================================================== ======
Cash consideration 16.3
Deferred consideration 2.5
=========================================================== ======
Total consideration 18.8
=========================================================== ======
The total net cash outflow on current year acquisitions
was as follows:
cash consideration paid (16.3)
=========================================================== ======
deferred consideration paid (0.5)
=========================================================== ======
cash & cash equivalents acquired 1.6
Total cash outflow (note 16) (15.2)
=========================================================== ======
The gross amount and fair value of CIS trade receivables amount
to GBP7.5m. It is expected that virtually all the contractual
amounts will be collected.
CIS contributed GBP26.9m to revenue and an operating profit of
GBP6.0m (before adjusting items) in the period from acquisition to
31 December 2022. These values are inclusive of revenue and margin
which would have been earned pre-acquisition on sales from ESCO to
CIS under the former distributor model. If the acquisition had
occurred at the start of 2022, the revenue and statutory profit for
the year from acquired operations would not have had a material
impact on the results disclosed in the Consolidated Income
Statement and therefore are not separately disclosed. Group
exceptional acquisition and integration costs in relation to CIS
are GBP1.6m in the year (note 5) and are reported within
Administrative expenses (note 4).
Motion Metrics
The Group completed the acquisition of 100% of the voting rights
of Motion Metrics on 30 November 2021 for an enterprise value of
CAD$150.0m (GBP88.7m), which represents initial equity value
consideration of GBP67.9m paid in cash and adoption of GBP20.8m of
vendor liabilities primarily relating to tax, settlement of an
employee growth participation plan and disposal costs.
Motion Metrics is a leading Canada-based global mining
technology business and is the market-leading developer of
innovative artificial intelligence (AI) and 3D rugged Machine
Vision Technology used in mines worldwide. Its technology helps
miners increase safety, efficiency and sustainability of their
operations. As part of the agreement, Motion Metrics' Vancouver
headquarters will become Weir's global centre for excellence in AI
and Machine Vision Technology.
Motion Metrics applications are highly complementary to Weir's
product portfolio. It has joined the ESCO Division and reporting
segment reflecting the early adoption of its technology in G.E.T.
where ESCO is an established global leader. Motion Metrics AI and
Machine Vision Technology capabilities are expected to be leveraged
across the whole mining value chain served by the Weir Group.
The provisional fair values, which were subject to finalisation
within 12 months of acquisition, have been finalised and are
disclosed in the table below. There are certain intangible assets
included in the GBP52.1m of goodwill recognised that cannot be
individually separated and reliably measured due to their nature.
These items include the future growth of the business, synergies
and an assembled workforce.
Adjustment Restated
(note (note
As reported 1) 1)
2021 2021 2021
Motion Metrics fair values GBPm GBPm GBPm
=========================================== =========== ========== ========
Property, plant & equipment - owned assets 0.6 (0.1) 0.5
=========================================== =========== ========== ========
Property, plant & equipment - right-of-use
assets 0.2 0.7 0.9
=========================================== =========== ========== ========
Intangible assets
Brand names 3.3 - 3.3
=========================================== =========== ========== ========
Intellectual property & trademarks 34.0 0.1 34.1
=========================================== =========== ========== ========
Purchased software 0.1 - 0.1
Inventories 2.2 (0.6) 1.6
=========================================== =========== ========== ========
Trade & other receivables 2.3 - 2.3
=========================================== =========== ========== ========
Income tax receivable 0.7 1.0 1.7
Interest-bearing loans & borrowings (0.2) (0.7) (0.9)
=========================================== =========== ========== ========
Trade & other payables (1.6) (0.5) (2.1)
Income tax payable (0.5) - (0.5)
=========================================== =========== ========== ========
Provisions (20.0) 0.2 (19.8)
=========================================== =========== ========== ========
Deferred tax liabilities (5.3) (0.1) (5.4)
Fair value of net assets 15.8 - 15.8
Goodwill arising on acquisition 52.1 - 52.1
=========================================== =========== ========== ========
Total consideration 67.9 - 67.9
=========================================== =========== ========== ========
Cash consideration 67.9 - 67.9
Total consideration 67.9 - 67.9
=========================================== =========== ========== ========
The total net cash outflow on prior year
acquisitions was as follows:
cash paid (67.9) - (67.9)
Total cash outflow (note 16) (67.9) - (67.9)
=========================================== =========== ========== ========
Contingent consideration
As part of the purchase agreement a maximum of an additional
CAD$100.0m is payable by the Group contingent on Motion Metrics
exceeding specific revenue and EBITDA targets over the first three
years following acquisition. Any balance that becomes payable would
be split, with 80% reflecting further consideration and 20% for a
new employee bonus plan. The entry point for any contingent payment
would require significant growth both in terms of revenue and
EBITDA margin by 2024. Progress has been made towards these targets
in 2022 and while the Group expects Motion Metrics to continue to
grow as it leverages the benefits of being partnered with ESCO, and
the opportunities within Minerals, the entry targets are considered
challenging. At present, the probability of Motion Metrics
exceeding these targets in order to trigger a contingent payment is
considered to remain uncertain, in part due to the relative infancy
of the business. As a result, no contingent consideration has been
recorded at the balance sheet date. This will be reassessed in
future periods as the business develops.
12. Provisions
Warranties
& contract Exceptional
claims Asbestos-related Employee-related items Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
======================== =========== ================ ================ =========== ===== ======
At 31 December 2021 9.4 61.6 12.4 11.1 11.0 105.5
======================== =========== ================ ================ =========== ===== ======
Restatement (note 1) - - - (0.2) - (0.2)
======================== =========== ================ ================ =========== ===== ======
Restated at 31 December
2021 9.4 61.6 12.4 10.9 11.0 105.3
======================== =========== ================ ================ =========== ===== ======
Additions 7.5 2.0 14.2 14.2 3.3 41.2
Utilised (7.1) (8.5) (14.1) (20.3) (1.3) (51.3)
Unutilised (0.3) (6.5) - (0.4) (0.5) (7.7)
Exchange adjustment 0.9 6.6 1.0 1.0 1.2 10.7
======================== =========== ================ ================ =========== ===== ======
At 31 December 2022 10.4 55.2 13.5 5.4 13.7 98.2
======================== =========== ================ ================ =========== ===== ======
Current 2022 10.4 8.5 7.9 5.2 3.3 35.3
======================== =========== ================ ================ =========== ===== ======
Non-current 2022 - 46.7 5.6 0.2 10.4 62.9
======================== =========== ================ ================ =========== ===== ======
At 31 December 2022 10.4 55.2 13.5 5.4 13.7 98.2
======================== =========== ================ ================ =========== ===== ======
Current 2021 9.2 7.6 6.9 10.6 2.0 36.3
======================== =========== ================ ================ =========== ===== ======
Non-current 2021 0.2 54.0 5.5 0.3 9.0 69.0
======================== =========== ================ ================ =========== ===== ======
At 31 December 2021
(restated note 2) 9.4 61.6 12.4 10.9 11.0 105.3
======================== =========== ================ ================ =========== ===== ======
The impact of discounting is only relevant for the
asbestos-related category of provision, with higher discount rates
at 31 December 2022, resulting in a GBP6.1m reduction in the
provision, which is reflected as unutilised above.
Warranties & contract claims
Provision has been made in respect of actual warranty claims on
goods sold and services provided, and allowance has been made for
potential warranty claims based on past experience for goods and
services sold with a warranty guarantee. At 31 December 2022, the
warranties portion of the provision totalled GBP6.6m (2021:
GBP7.2m). At 31 December 2022, all of these costs relate to claims
that fall due within one year of the balance sheet date.
Provision has been made in respect of sales contracts entered
into for the sale of goods in the normal course of business where
the unavoidable costs of meeting the obligations under the
contracts exceed the economic benefits expected to be received from
the contracts and before allowing for future expected aftermarket
revenue streams. Provision is made immediately when it becomes
apparent that expected costs will exceed the expected benefits of
the contract. At 31 December 2022, the contract claims element,
which includes onerous provision, was GBP3.8m (2021: GBP2.2m), all
of which is expected to be incurred within one year of the balance
sheet date.
Asbestos-related claims
2022 2021
GBPm GBPm
================================================= ==== ====
US asbestos-related provision - pre-1981 date of
first exposure 49.9 55.5
================================================= ==== ====
US asbestos-related provision - post-1981 date
of first exposure 2.8 3.0
================================================= ==== ====
US asbestos-related provision - total 52.7 58.5
================================================= ==== ====
UK asbestos-related provision 2.5 3.1
================================================= ==== ====
Total asbestos-related provision 55.2 61.6
================================================= ==== ====
US asbestos-related provision
Certain of the Group's US-based subsidiaries are co-defendants
in lawsuits pending in the US in which plaintiffs are claiming
damages arising from alleged exposure to products previously
manufactured which contained asbestos. The dates of alleged
exposure currently range from the 1950s to the 1980s.
The Group has historically held comprehensive insurance cover
for cases of this nature and continues to do so for claims with a
date of first exposure (dofe) pre-1981. The expiration of one of
the Group's insurance policies in 2019 resulted in no further
insurance cover for claims with a post-1981 dofe. All claims are
directly administered by National Coordinating Counsel on behalf of
the Group's insurers who also meet associated defence costs. The
insurers, their legal advisers and in-house counsel agree and
execute the defence strategy between them.
A summary of the Group's US asbestos-related claim activity is
shown in the table below.
2022 2021
Number of open claims Number Number
====================== ====== ======
Opening 1,765 1,586
====================== ====== ======
New 633 656
====================== ====== ======
Dismissed (443) (315)
====================== ====== ======
Settled (239) (162)
====================== ====== ======
Closing 1,716 1,765
====================== ====== ======
A review of both the Group's expected liability for US
asbestos-related diseases and the adequacy of the Group's insurance
policies to meet future settlement and defence costs was completed
in conjunction with external advisers in 2020 as part of our
planned triennial actuarial update. This review was based on an
industry standard epidemiological decay model, and Weir's claims
settlement history. The 2020 review reflected higher levels of
claims, particularly relating to the 1970s and 1980s, and a longer
dofe period, but lower settlement values than the previous review
conducted in 2017. The actuarial model incorporates claims, with a
dofe pre- and post-1981, primarily relating to Lung Cancer and
Mesothelioma and includes estimates relating to:
-- the number of future claims received;
-- settlement rates by disease type;
-- mean settlement values by disease type;
-- ratio of defence costs to indemnity value; and
-- the profile of associated cash flows through to 2049.
The actuarial model in 2020 provided a range of potential
liability based on levels of probability from 10% to 90%, which, on
an undiscounted basis, equates to GBP53m-GBP133m. The mean
actuarial estimate of GBP91m represents the expected undiscounted
value over the range of reasonably possible outcomes. The provision
in the financial statements is based on the mean actuarial
estimate, which is then adjusted each year to reflect expected
settlements in the model, discounting and restricting our estimate
to ten years of future claims.
2022 2021
================================= ============ ============
Period of future claims provided 10 years 10 years
================================= ============ ============
Discount rate 5.0% 2.6%
================================= ============ ============
The period over which the provision can be reliably estimated is
judged to be ten years due to the inherent uncertainty, resulting
from the changing nature of the US litigation environment detailed
below, and cognisant of the broad range of probability levels
included within the actuarial model. While claims may extend past
ten years and may result in a further outflow of economic benefits,
the Directors do not believe any obligation that may arise beyond
ten years can be reliably measured at this time. The effect of
extending the claims period by a further ten years is included in
the sensitivities below. The discount rate is set based on the
corporate bond yield available at the balance sheet date
denominated in the same currency, and with a term broadly
consistent to that of the liabilities being provided for, with
sensitivities to the discount rate also included below.
In 2020, confirmation was also received from external advisers
of the insurance asset available, which includes the estimated
defence costs that would be met by the insurer. An update to the
insurance asset is obtained annually and totals GBP32.0m at 31
December 2022 (2021: GBP42.2m). Based on the profile of the claims
in the actuarial model, external advisers expect the insurance
cover and associated limits currently in place to be sufficient to
meet the settlement and associated costs until c.2027. No cash
flows to or from the Group, related to claims with an exposure date
pre-1981, are expected until the exhaustion of the insurance asset.
Claims with an exposure date post-1981 are estimated to incur cash
outflows of less than GBP0.4m per annum and are not insured
currently or in the future.
The table below represents the Directors' best estimate of the
future liability and corresponding insurance asset.
2022 2021
US asbestos-related provision GBPm GBPm
========================================= ===== =====
Gross provision 58.8 67.4
========================================= ===== =====
Effect of discounting (6.1) (8.9)
========================================= ===== =====
Discounted US asbestos-related provision 52.7 58.5
========================================= ===== =====
Insurance asset 32.0 42.2
========================================= ===== =====
Net US asbestos-related liability 20.7 16.3
========================================= ===== =====
The net provision and insurance asset are presented in the
financial statements as follows.
2022 2021
GBPm GBPm
============================== ==== ====
Provisions - current 7.8 7.1
============================== ==== ====
Provisions - non-current 44.9 51.4
============================== ==== ====
Trade & other receivables 7.5 6.9
============================== ==== ====
Non-current other receivables 24.5 35.3
============================== ==== ====
There remains inherent uncertainty associated with estimating
future costs in respect of asbestos-related diseases. Actuarial
estimates of future indemnity and defence costs associated with
asbestos-related diseases are subject to significantly greater
uncertainty than actuarial estimates for other types of exposures.
This uncertainty results from factors that are unique to the
asbestos claims litigation and settlement process including but not
limited to:
i) the possibility of future state or federal legislation
applying to claims for asbestos-related diseases;
ii) the ability of the plaintiff's bar to develop and sustain
new legal theory and/or develop new populations of claimants;
iii) changes in focus of the plaintiff's bar;
iv) changes in the Group's defence strategy; and
v) changes in the financial condition of other co-defendants in
suits naming the Group and affiliated businesses.
As a result, there can be no guarantee that the assumptions used
to estimate the provision will result in an accurate prediction of
the actual costs that may be incurred.
Since the last triennial update completed in 2020, we have
experienced a higher number of claims received than modelled across
both disease types. Average settlement values have been higher for
Mesothelioma cases, but lower for Lung Cancer cases. Settlements
largely occur within four years of a claim being received and the
settlement rates for Mesothelioma cases are broadly in line with
the model while Lung Cancer case settlement rates are trending
below.
These variations from the model may be influenced by
fluctuations in the profile of case rates across jurisdictions
coupled with the potential impact of the Covid-19 pandemic.
However, if current case numbers and average settlement values were
to continue, this may lead to the insurance asset being eroded as
early as 2025, two years earlier than initially suggested in the
2020 actuarial model.
As noted above there are a number of uncertain factors involved
in the estimation of the provision and variations in case numbers
and settlements are to be expected from period-to-period. Our
actual claims experience will be reflected in the next triennial
valuation due in the second half of 2023, and will be incorporated
in our 2023 Annual Report and Financial Statements.
Sensitivity analysis reflecting reasonably probable scenarios
has been conducted. The results of this analysis are shown
below.
2022
Estimated impact on the discounted US asbestos-related
provision of GBPm
========================================================= ====
Increasing the number of projected future settled claims
by 15% 7.4
========================================================= ====
Increasing the estimated settlement value by 10% 4.6
========================================================= ====
Increasing the basis of provision by ten years 3.8
========================================================= ====
Decreasing the discount rate by 50bps 1.3
========================================================= ====
Application of these sensitivities, on an individual basis,
would not lead to a material change in the provision.
The Group's US subsidiaries have been effective in managing the
asbestos litigation, in part, because the Group has access to
historical project documents and other business records going back
more than 50 years, allowing it to defend itself by determining if
legacy products were present at the location of the alleged
asbestos exposure and, if so, the timing and extent of their
presence. In addition, the Group has consistently and vigorously
defended claims that are without merit.
UK asbestos-related provision
In the UK, there are outstanding asbestos-related claims that
are not the subject of insurance cover. The extent of the UK
asbestos exposure involves a series of legacy employer's liability
claims that all relate to former UK operations and employment
periods in the 1950s to 1970s. In 1989, the Group's employer's
liability insurer (Chester Street Employers Association Ltd) was
placed into run-off, which effectively generated an uninsured
liability exposure for all future long-tail disease claims with an
exposure period pre-dating 1 January 1972. All claims with a
disease exposure post 1 January 1972 are fully compensated via the
Government-established Financial Services Compensation Scheme. Any
settlement to a former employee whose service period straddles 1972
is calculated on a pro rata basis. The Group provides for these
claims based on management's best estimate of the likely costs
given past experience of the volume and cost of similar claims
brought against the Group.
The UK provision was reviewed and adjusted accordingly for
claims experience in the year, resulting in a provision of GBP2.5m
(2021: GBP3.1m).
Employee-related
Employee-related provisions arise from legal obligations in a
number of territories in which the Group operates, the majority of
which relate to compensation associated with periods of service. A
large proportion of the provision is for long service leave. The
outflow is generally dependent upon the timing of employees' period
of leave with the calculation of the majority of the provision
being based on criteria determined by the various
jurisdictions.
Exceptional items
The exceptional items provision relates to certain exceptional
charges included within note 5 where the cost is based on a
reliable estimate of the obligation.
The restated opening balance of GBP10.9m includes GBP8.7m for
opening balance sheet liabilities in Motion Metrics relating to
restructuring taxes and acquisition costs, cybersecurity costs of
GBP0.4m and final Oil & Gas Division disposal costs of GBP0.4m.
The remaining balance of GBP1.4m relates to prior year balances in
Minerals for severance costs and onerous contract provisions.
Additions in the year total GBP14.2m, including acquisition and
integration costs for Motion Metrics and CIS of GBP1.8m, which were
fully cash settled in the year, and GBP2.8m in relation to the
Performance Excellence programme, of which GBP2.2m has been paid in
the year with GBP0.2m held in creditors due for payment. The
remaining addition of GBP9.6m is in relation to the wind down of
our Minerals Russia subsidiary and includes severance, management
retentions and customer penalties. Of this balance, GBP5.3m has
been cash settled in the year, with the remaining GBP4.3m expected
to be settled in 2023.
The closing balance of GBP5.4m includes GBP4.3m related to
Russia, GBP0.4m in relation to capacity optimisation costs as part
of the Performance Excellence programme and GBP0.7m for final Oil
& Gas Division disposal costs related to tax and prior year
Minerals Division balances for severance and onerous contract
provisions.
Other
Other provisions include environmental obligations, penalties,
duties due, legal claims and other exposures across the Group.
These balances typically include estimates based on multiple
sources of information and reports from third-party advisers. The
timing of outflows is difficult to predict as many of them will
ultimately rely on legal resolutions and the expected conclusion is
based on information currently available. Where certain outcomes
are unknown, a range of possible scenarios is calculated, with the
most likely being reflected in the provision.
13. Interest-bearing loans & borrowings
In May 2021, the Group completed the issue of five-year US$800m
Sustainability-Linked Notes due to mature in May 2026, which
includes a target to reduce scope 1&2 CO(2) emissions by 30% by
December 2024, consistent with the Group's medium-term KPIs
announced in the 2020 Annual Report. The notes will initially bear
interest at a rate of 2.20% per annum to be paid semi-annually in
May and November. The interest on the notes will be linked to
achievement of Weir's 2024 Sustainability Performance Target (SPT).
The interest rate applicable to the Notes will increase by 0.25% to
2.45% per annum from and including the last interest payment date
preceding 31 December 2024 if the Group does not attain its SPT.
Also, in April 2021 the Group took the decision to settle its
GBP200m term loan facility, which was due to mature in March 2022,
with a charge to the Consolidated Income Statement of the remaining
unamortised costs of GBP0.8m.
In April 2022, the Group completed the refinancing of its
US$950m Revolving Credit Facility (RCF), which was due to expire in
June 2023. This was replaced with a US$800m RCF with a syndicate of
11 global banks and will mature in April 2027, with the option to
extend for up to a further two years. The RCF includes a link to
the Group's sustainability goals, with an interest adjustment of
+/- 0.025% dependant on achievement, and the covenant terms are
unchanged.
At 31 December 2022, GBP336.5m was drawn under the US$800m
multi-currency RCF which, is disclosed net of unamortised issue
costs of GBP2.4m. At 31 December 2021 GBPnil was drawn under the
US$950m multi-currency RCF net of unamortised issue costs of
GBP3.0m.
At 31 December 2022, a total of GBP165.3m (2021: GBP583.6m) was
outstanding under private placement, which is disclosed net of
unamortised issue costs of GBPnil (2021: GBP0.1m).
At 31 December 2022, a total of GBP657.8m (2021: GBP586.5m) was
outstanding under Sustainability-Linked notes, which is disclosed
net of unamortised issue costs of GBP3.5m (2021: GBP4.5m).
14. Pensions & other post-employment benefit plans
2022 2021
GBPm GBPm
====================== ==== ======
Net asset (liability) 15.1 (56.7)
====================== ==== ======
The defined benefit pension schemes across the Group's legacy UK
and North American schemes improved to a net surplus of GBP15.1m
(2021: deficit of GBP56.7m) primarily due to changes in financial
assumptions mainly due to a rise in discount rates over the period,
partially offset by losses on plan assets.
15. Derivative financial instruments
The Group enters into derivative financial instruments in the
normal course of business in order to hedge its exposure to foreign
exchange risk. Derivatives are only used for economic hedging
purposes and no speculative positions are taken. Derivatives are
recognised as held for trading and at fair value through profit and
loss unless they are designated in IFRS 9 compliant hedge
relationships.
The table below summarises the types of derivative financial
instrument included within each balance sheet category.
2022 2021
GBPm GBPm
Included in current assets
============================================== ====== =====
Forward foreign currency contracts designated
as cash flow hedges 1.0 -
Other forward foreign currency contracts 7.9 7.1
============================================== ====== =====
8.9 7.1
============================================== ====== =====
Included in current liabilities
============================================== ====== =====
Forward foreign currency contracts designated
as cash flow hedges (1.9) (0.4)
============================================== ====== =====
Forward foreign currency contracts designated
as net investment hedges (0.1) -
Other forward foreign currency contracts (11.2) (3.4)
============================================== ====== =====
(13.2) (3.8)
============================================== ====== =====
Included in non-current liabilities
Other forward foreign currency contracts - (0.1)
============================================== ====== =====
- (0.1)
============================================== ====== =====
Net derivative financial (liabilities) assets
- total Group (4.3) 3.2
============================================== ====== =====
16. Additional cash flow information
2022 2021
Notes GBPm GBPm
===================================================== ===== ======= ======
Total operations
===================================================== ===== ======= ======
Net cash generated from operations
===================================================== ===== ======= ======
Operating profit - continuing operations 307.5 256.6
===================================================== ===== ======= ======
Operating profit - discontinued operations 7 - 0.6
===================================================== ===== ======= ======
Operating profit - total operations 307.5 257.2
===================================================== ===== ======= ======
Exceptional and other adjusting items 5 51.4 3.8
Amortisation of intangible assets 41.6 40.2
===================================================== ===== ======= ======
Share of results of joint ventures (2.5) (3.3)
===================================================== ===== ======= ======
Depreciation of property, plant & equipment 47.0 43.0
===================================================== ===== ======= ======
Depreciation of right-of-use assets 31.4 27.6
===================================================== ===== ======= ======
Impairment of property, plant & equipment 0.2 -
===================================================== ===== ======= ======
Grants received (0.2) (0.3)
===================================================== ===== ======= ======
Gains on disposal of property, plant & equipment (0.6) (4.3)
Funding of pension & post-retirement costs (2.9) (2.7)
===================================================== ===== ======= ======
Employee share schemes 8.0 10.9
===================================================== ===== ======= ======
Transactional foreign exchange 14.3 4.8
===================================================== ===== ======= ======
Increase in provisions 1.2 3.9
===================================================== ===== ======= ======
Cash generated from operations before working
capital cash flows 496.4 380.8
===================================================== ===== ======= ======
Increase in inventories (128.6) (84.9)
===================================================== ===== ======= ======
Decrease (increase) in trade & other receivables
& construction contracts 49.8 (61.7)
===================================================== ===== ======= ======
Increase in trade & other payables & construction
contracts 30.2 31.8
===================================================== ===== ======= ======
Cash generated from operations 447.8 266.0
===================================================== ===== ======= ======
Additional pension contributions paid (9.7) (7.8)
===================================================== ===== ======= ======
Exceptional and other adjusting cash items (14.2) (8.6)
===================================================== ===== ======= ======
Exceptional cash items - acquired vendor liabilities (9.7) (11.1)
===================================================== ===== ======= ======
Income tax paid (93.4) (82.4)
===================================================== ===== ======= ======
Net cash generated from operating activities 320.8 156.1
===================================================== ===== ======= ======
Cash flows from discontinued operations included above are
disclosed separately in note 7.
Exceptional and other adjusting items are detailed in note
5.
The following tables summarise the cash flows arising on
acquisitions (note 11) and disposals (notes 5 and 7).
2022 2021
GBPm GBPm
===================================================== ===== =====
Acquisitions of subsidiaries
Acquisition of subsidiaries - cash consideration
paid 16.3 67.9
===================================================== ===== =====
Acquisition of subsidiaries - deferred consideration
paid 0.5 -
===================================================== ===== =====
Cash & cash equivalents acquired (1.6) -
Total cash outflow relating to acquisitions 15.2 67.9
===================================================== ===== =====
Net cash (outflow) inflow arising on disposals
===================================================== ===== =====
Consideration received net of costs paid & cash
disposed of - Oil & Gas Division (excluding AMCO) - 258.5
===================================================== ===== =====
Consideration received net of costs paid & cash
disposed of - AMCO Joint Venture - 24.0
===================================================== ===== =====
Consideration received net of costs paid & cash
disposed of - ESCO Russia (2.0) -
===================================================== ===== =====
Prior period disposals - settlement of final costs
and final completion adjustment (0.1) -
===================================================== ===== =====
Total cash (outflow) inflow relating to disposals (2.1) 282.5
===================================================== ===== =====
2022 2021
GBPm GBPm
=============================================== ======= ======
Cash & cash equivalents comprise the following
=============================================== ======= ======
Cash & short-term deposits 691.2 564.4
=============================================== ======= ======
Bank overdrafts & short-term borrowings (213.7) (64.4)
477.5 500.0
=============================================== ======= ======
Restated
(note 1)
2022 2021
GBPm GBPm
================================================ ========= =========
Net debt comprises the following
================================================ ========= =========
Cash & short-term deposits 691.2 564.4
================================================ ========= =========
Current interest-bearing loans & borrowings (406.3) (524.1)
================================================ ========= =========
Non-current interest-bearing loans & borrowings (1,082.1) (812.8)
(797.2) (772.5)
================================================ ========= =========
Reconciliation of financing cash flows to movement in net
debt
Restated
(note
1)
Opening Closing
balance balance
at 31 at 31
December Cash Additions/ Non-cash December
2021 movements acquisitions Disposals FX movements 2022
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ========= ========== ============= ========= ======= ========== =========
Cash & cash equivalents 500.0 (51.0) 1.6 (1.9) 28.8 - 477.5
=============================== ========= ========== ============= ========= ======= ========== =========
Third-party loans (1,174.7) 133.4 (0.4) - (123.8) - (1,165.5)
=============================== ========= ========== ============= ========= ======= ========== =========
Leases (105.4) 30.5 (35.0) - (6.0) 0.8 (115.1)
=============================== ========= ========== ============= ========= ======= ========== =========
Unamortised issue costs 7.6 2.7 - - - (4.4) 5.9
=============================== ========= ========== ============= ========= ======= ========== =========
Amounts included in gross
debt (1,272.5) 166.6 (35.4) - (129.8) (3.6) (1,274.7)
=============================== ========= ========== ============= ========= ======= ========== =========
Amounts included in net
debt (772.5) 115.6 (33.8) (1.9) (101.0) (3.6) (797.2)
=============================== ========= ========== ============= ========= ======= ========== =========
Financing derivatives 1.4 0.3 - - - (1.8) (0.1)
Total financing liabilities(1) (1,271.1) 166.9 (35.4) - (129.8) (5.4) (1,274.8)
=============================== ========= ========== ============= ========= ======= ========== =========
Restated
(note
1)
Opening Closing
balance balance
at 31 at 31
December Cash Non-cash December
2020 movements Additions/acquisitions Disposals FX movements 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================= ========= ========== ====================== ========= ====== ========== =========
Cash & cash equivalents 374.1 150.1 - (16.1) (8.1) - 500.0
============================= ========= ========== ====================== ========= ====== ========== =========
Third-party loans (1,252.6) 104.4 (0.2) - (26.3) - (1,174.7)
============================= ========= ========== ====================== ========= ====== ========== =========
Leases (179.4) 27.8 (21.3) 65.2 2.1 0.2 (105.4)
============================= ========= ========== ====================== ========= ====== ========== =========
Unamortised issue costs 6.5 5.1 - - - (4.0) 7.6
============================= ========= ========== ====================== ========= ====== ========== =========
Amounts included in gross
debt (1,425.5) 137.3 (21.5) 65.2 (24.2) (3.8) (1,272.5)
============================= ========= ========== ====================== ========= ====== ========== =========
Amounts included in net
debt (1,051.4) 287.4 (21.5) 49.1 (32.3) (3.8) (772.5)
============================= ========= ========== ====================== ========= ====== ========== =========
Financing derivatives (2.5) (10.6) - - - 14.5 1.4
Total financing
liabilities(1) (1,428.0) 126.7 (21.5) 65.2 (24.2) 10.7 (1,271.1)
============================= ========= ========== ====================== ========= ====== ========== =========
(1. Total financing liabilities comprise gross debt plus other
liabilities relating to financing activities.)
17. Related party disclosure
The following table provides the total amount of significant
transactions that have been entered into by the Group with related
parties for the relevant financial year and outstanding balances at
the year end.
Sales Sales Purchases Amounts Amounts
to related to related from related owed to owed by
parties parties parties related related
- goods - services - goods parties parties
Related party GBPm GBPm GBPm GBPm GBPm
==================== ==== =========== =========== ============= ======== ========
Joint ventures 2022 1.1 0.1 25.9 6.2 0.3
==================== ==== =========== =========== ============= ======== ========
2021 0.7 0.1 16.7 - 1.3
==================== ==== =========== =========== ============= ======== ========
Group pension plans 2022 - - - 8.2 -
==================== ==== =========== =========== ============= ======== ========
2021 - - - 5.9 -
==================== ==== =========== =========== ============= ======== ========
18. Legal claims
The Company and certain subsidiaries are, from time-to-time,
party to legal proceedings and claims that arise in the normal
course of business. Provisions have been made where the Directors
have assessed that a cash outflow is probable. All other claims are
believed to be remote or are not yet ripe.
19. Exchange rates
The principal exchange rates applied in the preparation of these
financial statements were as follows.
Average rate (per GBP) 2022 2021
======================= ======== ========
US Dollar 1.24 1.38
======================= ======== ========
Australian Dollar 1.78 1.83
======================= ======== ========
Euro 1.17 1.16
======================= ======== ========
Canadian Dollar 1.61 1.73
======================= ======== ========
Chilean Peso 1,078.02 1,043.54
======================= ======== ========
South African Rand 20.19 20.34
======================= ======== ========
Brazilian Real 6.39 7.42
Chinese Yuan 8.30 8.88
======================= ======== ========
Indian Rupee 97.06 101.70
======================= ======== ========
Closing rate (per GBP)
======================= ======== ========
US Dollar 1.21 1.35
======================= ======== ========
Australian Dollar 1.77 1.86
======================= ======== ========
Euro 1.13 1.19
======================= ======== ========
Canadian Dollar 1.64 1.71
======================= ======== ========
Chilean Peso 1,026.77 1,153.18
======================= ======== ========
South African Rand 20.61 21.57
======================= ======== ========
Brazilian Real 6.39 7.54
Chinese Yuan 8.34 8.60
======================= ======== ========
Indian Rupee 100.05 100.66
======================= ======== ========
The Group's operating profit before adjusting items from
continuing operations was denominated in the following
currencies.
2022 2021
GBPm GBPm
========================== ====== ======
US Dollar 192.8 131.1
========================== ====== ======
Canadian Dollar 63.5 44.8
========================== ====== ======
Australian Dollar 55.4 51.2
========================== ====== ======
Chilean Peso 53.8 40.3
========================== ====== ======
Euro 24.4 27.4
========================== ====== ======
South African Rand 11.3 9.1
========================== ====== ======
Brazilian Real 10.4 6.7
========================== ====== ======
Chinese Yuan 10.3 6.0
========================== ====== ======
Indian Rupee 7.1 4.5
========================== ====== ======
UK Sterling (34.9) (27.4)
========================== ====== ======
Other 0.7 2.5
========================== ====== ======
Adjusted operating profit 394.8 296.2
========================== ====== ======
20. Events after the balance sheet date
In January 2023, the Group added a further GBP300m loan facility
to its available financing. The facility will expire in January
2024, subject to a one-year extension option. This facility has not
been drawn down subsequent to the year end and the outstanding
balance remains GBPnil.
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END
FR UWSARORUUUUR
(END) Dow Jones Newswires
March 01, 2023 02:00 ET (07:00 GMT)
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